Commercial and Multifamily Borrowing Surges 59% in Q3

Commercial and multifamily loan originations experienced significant growth in the third quarter, rising 59% year over year and 44% compared to the previous quarter, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

"After a slow start to the year, borrowing and lending backed by commercial real estate properties picked up during the third quarter,” said Jamie Woodwell, MBA’s head of commercial real estate research. “Lower interest rates were a key driver of the increase, with the yield on the 10-year Treasury bond falling from an average of 4.31% in June to 3.72% in September. However, the recent uptick in long-term rates may temper this momentum moving forward.”

Year-Over-Year Highlights

• Multifamily properties: Originations rose 56%.
• Health care properties: Loan volume skyrocketed by 510%.
• Hotel properties: Increased by 99%.
• Retail properties: Gained 82%.
• Industrial properties: Saw a 57% uptick.
• Office properties: Declined by 3%.

Among investor types:

• Commercial mortgage-backed securities (CMBS): Dollar volume increased 260%.
• Depository loans: Grew by 69%.
• Investor-driven lenders: Jumped 62%.
• Life insurance companies: Increased 31%.
• Government-sponsored enterprises (GSEs): Rose 28%.

Quarter-Over-Quarter Highlights

• Multifamily properties: Originations climbed 53%.
• Healthcare properties: Loan volume surged by 191%.
• Office properties: Grew by 42%.
• Industrial properties: Increased by 21%.
• Hotel properties: Declined by 25%.

By investor type:

• Depository loans: Increased 86%.
• GSE loans: Rose 55%.
• Life insurance companies: Saw a 40% increase.
• Investor-driven lenders: Up 21%.
• CMBS: Grew by 12%.

“Each property and loan face unique circumstances influenced by factors such as property type, market conditions, submarket dynamics, vintage, and business plans,” added Woodwell. “These variables will continue to shape borrowing and lending activity in the coming quarters.”