Finance

Strong property fundamentals, low interest rates and ample financing options continue to support the ability of multifamily and commercial real estate investors to repay their mortgages.

Low long-term interest rates, growing property incomes and rising values continue to support new loan demand, with multifamily and industrial registering the strongest first-half 2018 activity.

Between 2016 and 2017, the dollar volume of loans reported intermediated for REITs, mortgage REITS and specialty finance companies; for credit companies; and for other “non-traditional” lenders grew by 56 percent.

During the first three months of 2018, commercial and multifamily mortgage debt outstanding increased more than during any other first quarter since before the Great Recession.

Record-setting growth across sectors characterized 2018's first quarter, reported Jamie Woodwell, vice president of commercial real estate research with the Mortgage Bankers Association.

MBA’s commercial/multifamily mortgage bankers origination index reported an 8 percent increase in the dollar volume of loans closed for Fannie Mae and Freddie Mac between the first quarter of 2017 and the first quarter of 2018.

Commercial banks and savings institutions constituted the most active investor group in 2017, with $151.2 billion in activity (29 percent of total volume).

Multifamily property loans accounted for 44 percent of closed loan activity in 2017, compared to 23 percent a decade earlier, according to Mortgage Bankers Association data.

The report tracks 135 firms’ total originations activity, and includes breakouts for loans in which the firm acted as a lender and as an intermediary.

Commercial and multifamily mortgages ended 2017 continuing to perform extraordinarily well.

The market tailwinds of strong fundamentals, increasing property values and ready access to mortgage and other credit all put downward pressure on delinquency rates, according to an MBA analysis.

Because many commercial and multifamily mortgages are 10-year loans, and little debt was issued in 2008 during the onset of the credit crunch, mortgage maturities are 42 percent lower this year than last.