Multifamily Lending Demand Holds Steady
The multifamily sector saw the smallest year-over-year decline of any property category, according to MBA’s latest survey.
Origination Volume Index; 2001 Quarterly Average = 100
Source: Mortgage Bankers Association
Commercial and multifamily mortgage loan originations decreased 14 percent in the first quarter of 2021 compared to the same period last year, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
It’s important to note the seasonality trends usually seen in commercial real estate in the first quarter, in addition to the ongoing impact and uncertainty at the beginning of the year amidst the COVID-19 pandemic. In line with seasonality trends, originations during the first three months of the year were 37 percent lower than the fourth quarter of 2020.
Although borrowing and lending backed by commercial and multifamily properties was lower than last year’s first quarter, the 14 percent decline was smaller than the year-over-year drops seen at the height of the pandemic-induced economic slowdown. Industrial and multifamily properties continue to attract the greatest interest.
Compared to a year earlier, by property type, multifamily properties saw the smallest decline over the year, decreasing by 5 percent.
As the economic recovery and re-opening speeds up, investors and lenders should have greater clarity into which pandemic-led changes are temporary, and which are more permanent. This is true not only for every property type, but especially for multifamily. Household formation trends and insufficient for-sale and rental property supply should continue to keep demand up.
