A report from the Mortgage Bankers’ Association (MBA) says that multifamily mortgage originations were up 56 percent year-over-year in Q3. Originations of all commercial mortgages as a single asset class rose 59 percent year-over-year.
Commercial mortgage originations rise year-over-year
The first chart, below, shows the MBA’s quarterly origination volume indexes since Q1 2016 both for all commercial mortgages as a single asset class and for multifamily mortgages. The indexes are reported relative to the year 2001, with the average quarterly volume in that year defined as a value of 100.
The usual pre-pandemic pattern of mortgage origination volume was for origination volume to increase quarter-by-quarter through the year with Q1 mortgage origination volume declining from the level in Q4 of the previous year. The origination volume each quarter would be higher than that of the same quarter of the previous year.
While the lending volume in the first two quarters of 2024 was down from that in the same quarter of the year before, robust year-over-year growth was seen in Q3. This was both due to strong growth in the origination volume in the quarter and also due to origination volume in Q3 of last year being unusually weak. In addition, the pre-pandemic seasonal pattern of quarter over quarter growth through the year is visible in the data, possibly indicating that the multifamily mortgage market is normalizing. Multifamily mortgage originations were up 52 percent from their level in Q2.
The report covers originations for 5 other commercial property categories. They are office, retail, industrial, hotel and health care.
Mortgage originations for office property fell 3 percent year-over-year but rose 42 percent quarter-over-quarter. Retail property originations rose 82 percent year-over-year and 56 percent quarter-over-quarter. Industrial mortgage originations rose 57 percent year-over-year and 21 percent quarter-over-quarter. Hotel originations rose 99 percent year-over-year but fell 25 percent quarter-over-quarter. Health care originations rose 510 percent year-over-year and 191 percent quarter-over-quarter.
Who’s lending
The MBA report also includes data on the sources of the commercial mortgages being originated. However, this section of the report does not break out multifamily mortgages from lending on other types of commercial real estate.
The report provides data on five categories of lenders: commercial mortgage-backed securities (CMBS) and conduits, depositories (aka commercial banks and savings and loans), life insurance companies, the government sponsored entities (GSEs), Fannie Mae and Freddie Mac, and investor-driven lenders such as REITs and specialty finance companies. The index values are quoted relative to the average quarterly origination volumes in the year 2001. The index values of different originators cannot be used to compare their absolute levels of mortgage originations since their origination levels in the baseline year of 2001 were different.
To gain insight into the absolute levels of funding provided by the different classes of originators, readers should look to the MBA’s report on mortgage debt outstanding. However, the origination index values can be compared to see which classes of originators are growing their business and which are not.
The final chart shows the history of commercial mortgage origination volume indexes since Q1 2018 by class of lender. It shows that, in Q3, all classes of lenders raised their commercial mortgage origination volume quarter-over-quarter for the second quarter in a row.
The GSEs, who held 48.8 percent of multifamily mortgages as of Q2, saw their originations grow by 55 percent quarter-over-quarter. Depositories, who hold 29.9 percent of multifamily mortgages, grew their originations 86 percent quarter-over-quarter. Life insurers, who hold 11.2 percent of multifamily mortgages, raised their originations by 40 percent compared to Q2. CMBS and conduits originations rose 12 percent quarter-over-quarter while investor-driven lenders grew their originations by 21 percent.
On a year-over-year basis, commercial mortgage originations were up for all classes of lenders. Originations rose 28 percent for the GSEs and 69 percent for depositories. Commercial mortgage originations increased 31 percent for life insurers, 260 percent for CMBS and conduits and 62 percent for investor-driven lenders.
The full report from the MBA includes additional information on lending for other commercial property types. It can be found here.
