Mortgage Originations Are Up 27% From Prior Quarter
Hotel, healthcare, and industrial saw increases while retail, office, and multifamily dropped.
CRE mortgage originations, for both commercial and multifamily properties, in 2024 Q2 were up 3% year-over-year and 27% over the first quarter, according to the Mortgage Bankers Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. Measured year-to-date, the growth was 2%.
Last year in the same quarter, Q1 to Q2 growth was 23%, while the year-over-year rise from 2022 was -53%. The year-to-date comparison to 2022 was -54%.
“Borrowing and lending backed by commercial real estate remained subdued in the second quarter,” Jamie Woodwell, MBA’s head of commercial real estate research, said in prepared remarks. “Most capital sources remain ready, willing and able to lend on properties that can support a loan. Driven by growth in the single-asset single-borrower markets, originations for CMBS grew significantly during the quarter.”
The variations by property type, and also by lender, are significant. Here they are, listing Q2 year-over-year, Q2 over Q1, and year-to-date Q2 over year-to-date Q1:
- CMBS/Conduits — 154%, 21%, 122%
- Depositories — -26%, 21%, -34%
- Life Insurance Companies — 11%, 60%, 19%
- Fannie Mae/Freddie Mac — -20%, 16%, -19%
- Investor-Driven Lenders — 17%, 20%, 56%
- Multifamily — -14%, 27%, -11%
- Office — -29%, 4%, -25%
- Retail — -7%, 18%, -20%
- Industrial — 77%, 29%, 71%
- Hotel — 172%, 84%, 77%
- Healthcare — 50%, 178%, 20%
Hotel, healthcare, and industrial all saw increases in originations, as the data show. Retail, office, and multifamily categories all saw decreases. Office would seem to make sense given falling valuations and transactions. The same is true, though not to the same degree, with multifamily. Retail sales have been largely stagnant, with companies including Amazon, Disney, and Yum Brands said consumers are either looking for bargains or avoiding goods and services they think are too expensive.
Interest rates are still high and a “large slug” of loan maturations on the way, suggesting that more borrower activity in coming quarter, according to Woodwell.
However, that would seem to depend on how quickly and extensively the Federal Reserve lowered the federal funds rate. It’s not clear how much a 25-basis-point decrease, or even a 50-basis-point one, would affect demand.