Economic uncertainty led to a logjam in commercial real estate sales
Commercial and multifamily mortgage originations fell to their lowest rate in nine years, according to the Mortgage Bankers Association's quarterly report.
Originations plunged 56% annually in the first quarter, down 42% from the previous quarter. The decline comes as challenging market and economic conditions continue suppressing sales transactions and loan origination volumes.
"While the first quarter is typically the quietest quarter of the year, borrowing and lending backed by commercial and multifamily properties declined in the first quarter to the slowest pace since the first quarter of 2014," said Jamie Woodwell, head of commercial real estate research at MBA. "Uncertainty and volatility in regard to interest rates and property values, and supply and demand imbalances for some property types, has led to a logjam in commercial real estate sales and financing markets."
All major property types saw decreases in volume during the quarter. The dollar volume of loans for industrial properties was down 72% year over year, health care properties were down by 69%, a 67% decrease for office properties, multifamily properties down by 55%, and an 8% decrease for both hotel and retail properties.
Among investor types, the dollar volume of loans originated for life insurance company loans plummeted by 73% annually. Investor-driven lenders followed at 67%, commercial mortgage-backed securities (CMBS) loans at 59%, depositories at 54%, and Fannie Mae and Freddie Mac loans at 14%.
"As loans mature and adjustable-rate loans reset, we should start to get greater insights into where things stand," Woodwell said.
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