Buttressing this contention, the MBA CREF survey found that 96% of originators reported that in '16 lenders had a “strong” or “very strong” appetite to make new loans and 77% expect lenders' appetite to be “strong” or “very strong” again this year. And 80% of originators reported that in last year, borrowers had a “strong” or “very strong” appetite to take out new loans and 69% expect borrowers' 'appetite to be “strong” or “very strong” in '17.

There are mixed views on how origination volumes may change for individual capital sources. Pluralities of originators believe each major investor group, with the exception of life insurance companies, will see no change in origination volume, while the plurality expect life companies to increase volumes between 0% and 5%. Originations are generally expected to be flat or increase for CMBS, with 25% of respondents expecting growth of greater than 5%; life insurance companies/pensions (18% anticipate growth of greater than 5%); bank portfolios (18% expect growth of greater than 5%); FHA (15% anticipate of greater than 5%); and Fannie Mae and Freddie Mac (10% anticipate of greater than 5%).

Loan returns are expected to increase in 2017, with 50% of respondents characterizing the loans made in '16 as “somewhat” or “very low” return. Thirty percent have these expectations for loans made this year.

Along with an increase in returns, loan risk is expected to increase slightly this year. More respondents characterized the loans made in '16 as low risk than as high risk. In 2017, most respondents (53%) expect loans to be medium risk, with the reminder evenly split between seeing higher and lower risk loans.

The majority of respondents, or 52%, anticipate that potential regulatory and legislative changes could be positive for the market. Twenty-eight percent anticipate a neutral impact and one-fifth see potential negative impacts.

Among the top reasons cited for positive impacts were potential changes to Dodd-Frank rules—and the CMBS risk retention requirement in particular—and a more positive economic climate. Among the reasons cited for potential negative impacts were uncertainties that could be caused by changing rules. MBA conducted the survey in December among the leaders of 60 of the top commercial/multifamily mortgage origination firms, as determined by MBA's Annual Origination Rankings Report.

WASHINGTON, DC—Originators in the commercial and multifamily mortgage space expect borrower demand to remain strong in the year ahead, although the results of the Mortgage Bankers Association's latest MBA CREF Outlook Survey suggest a little less enthusiasm than lenders evinced a year ago. Sixty-three percent of the top commercial mortgage firms expect originations to increase this year, compared with 90% of survey respondents who said this at the outset of 2016.

Twenty-six percent of survey respondents said they expect a volume increase of 5% or more this year, and 50% expect their own firm's originations expect their own firm's originations to increase by 5% or more. A year ago, the figures were 50% and 61%, respectively.

“Commercial mortgage bankers expect 2017 to carry over much of the momentum from '16,” says MBA's VP for commercial real estate research, Jamie Woodwell. “Most of the top firms expect strong demand from both lenders and borrowers in '17, although not quite as strong as '16.

“Originators generally see borrowing and lending volumes growing slightly, with just over half expecting potential regulatory and legislative changes to be positive for the market,” he adds. “The survey paints expectations of a strong, steady market in 2017.”

Buttressing this contention, the MBA CREF survey found that 96% of originators reported that in '16 lenders had a “strong” or “very strong” appetite to make new loans and 77% expect lenders' appetite to be “strong” or “very strong” again this year. And 80% of originators reported that in last year, borrowers had a “strong” or “very strong” appetite to take out new loans and 69% expect borrowers' 'appetite to be “strong” or “very strong” in '17.

There are mixed views on how origination volumes may change for individual capital sources. Pluralities of originators believe each major investor group, with the exception of life insurance companies, will see no change in origination volume, while the plurality expect life companies to increase volumes between 0% and 5%. Originations are generally expected to be flat or increase for CMBS, with 25% of respondents expecting growth of greater than 5%; life insurance companies/pensions (18% anticipate growth of greater than 5%); bank portfolios (18% expect growth of greater than 5%); FHA (15% anticipate of greater than 5%); and Fannie Mae and Freddie Mac (10% anticipate of greater than 5%).

Loan returns are expected to increase in 2017, with 50% of respondents characterizing the loans made in '16 as “somewhat” or “very low” return. Thirty percent have these expectations for loans made this year.

Along with an increase in returns, loan risk is expected to increase slightly this year. More respondents characterized the loans made in '16 as low risk than as high risk. In 2017, most respondents (53%) expect loans to be medium risk, with the reminder evenly split between seeing higher and lower risk loans.

The majority of respondents, or 52%, anticipate that potential regulatory and legislative changes could be positive for the market. Twenty-eight percent anticipate a neutral impact and one-fifth see potential negative impacts.

Among the top reasons cited for positive impacts were potential changes to Dodd-Frank rules—and the CMBS risk retention requirement in particular—and a more positive economic climate. Among the reasons cited for potential negative impacts were uncertainties that could be caused by changing rules. MBA conducted the survey in December among the leaders of 60 of the top commercial/multifamily mortgage origination firms, as determined by MBA's Annual Origination Rankings Report.