A report from the Mortgage Bankers’ Association (MBA) says that multifamily mortgage originations were up 69 percent year-over-year in Q4. Originations of all commercial mortgages as a single asset class rose 84 percent year-over-year.
Commercial mortgage originations rise steadily
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.
Origination volume for multifamily mortgages in 2024 followed the pre-pandemic pattern except that volume in Q1 and Q2 did not exceed that of the same quarters in 2023. However, origination volume did grow quarter-by-quarter through the year with Q4 multifamily mortgage originations up 22 percent from their level in Q3.
The report covers originations for 5 other commercial property categories. They are office, retail, industrial, hotel and health care.
Mortgage originations for office property rose 105 percent year-over-year and rose 43 percent quarter-over-quarter. Retail property originations rose 48 percent year-over-year and 55 percent quarter-over-quarter. Industrial mortgage originations rose 94 percent year-over-year and 10 percent quarter-over-quarter. Hotel originations rose 124 percent year-over-year and 159 percent quarter-over-quarter. Health care originations rose 72 percent year-over-year but fell 51 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 actively lending today 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, after three turbulent years from 2020 to 2022, in 2024 all the lender types covered in the report moved their origination volumes in the same direction with steady growth throughout the year.
The GSEs, who held 48.6 percent of multifamily mortgages as of Q3, saw their originations grow by 36 percent quarter-over-quarter. Depositories, who hold 29.7 percent of multifamily mortgages, grew their originations 34 percent quarter-over-quarter. Life insurers, who hold 11.5 percent of multifamily mortgages, raised their originations by 21 percent compared to Q3. CMBS and conduits originations rose 6 percent quarter-over-quarter while investor-driven lenders grew their originations by 51 percent.
On a year-over-year basis, commercial mortgage originations were up for all classes of lenders. Originations rose 72 percent for the GSEs and 94 percent for depositories. Commercial mortgage originations increased 70 percent for life insurers, 128 percent for CMBS and conduits and 81 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.
