Borrowing drops 13% for multi-family commercial start-ups in the third quarter

Commercial and multi-family mortgage originations fell 13% in the third quarter of 2022 compared to the same period last year, according to the Mortgage Bankers Association‘s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

“After a strong first half, rising interest and capitalization rates began to affect deal volume in the third quarter,” said Jamie Woodwell, head of commercial real estate research at the MBA. “Rising yields from investment alternatives – including the 10-year Treasury yield which more than doubled in the first nine months of the year – have shifted real estate finance and values, and it will take time for the market to fully absorb these changes.Volatility also had an impact, making trade sizing extremely difficult.The result was the first of what could be many quarters of borrowing and trading activity. ready depressed.

“Different sources of capital felt the downturn in different ways – with third quarter issuance in the CMBS market down nearly 75% from a year earlier, while issuance by banks and other custodians increased. by 25%,” continues Woodwell. “A general decline in transaction activity is likely to impact all sources of capital, but perhaps not in the same way.”

Compared to the previous year, a decline in originations for offices, multi-family and retail led to an overall decline in commercial/multi-family loan volumes. By property type, office decreased by 44%, multi-family dwellings decreased by 16%, retail decreased by 6% and industrial decreased by 4%. Loans backed by hotel properties increased 24% and healthcare increased 61%.

Among investor types, the dollar volume of loans issued for commercial mortgage-backed securities (CMBS) was down 71% year-over-year, life insurance company portfolios down 42%, government-sponsored companies (GSE – Fannie Mae and Freddie Mac) down 15%, and investor-focused lenders down 8%. Originations for custodians increased by 25%.

On a quarterly basis, originations in the third quarter for office properties decreased by 31% compared to the second quarter of 2022. There was a decrease of 27% in originations for commercial properties, a decrease of 21% for healthcare buildings, a decrease of 12% for multi-family properties and a decrease of 6% for industrial properties. Originations for hotel properties increased by 45%.

Among investor types, dollar lending volume for life insurance companies fell 37%, commercial mortgage-backed securities (CMBS) fell 35%, originations for lenders focused on investors decreased by 22% and loans to depositories decreased by 7%. Mounts for government-sponsored companies (GSE – Fannie Mae and Freddie Mac) increased by 17%.

Read the full report here.

Image: Etienne Beauregard-Riverin on Unsplash

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