But MBA says market fundamentals remain stable, for now
Despite economic and market uncertainty, multifamily lending remained solid in 2022, according to a Mortgage Bankers Association (MBA) report.
Last year, 2,242 multifamily lenders financed roughly $480.1 billion in new mortgages for apartment buildings with five or more units, down 1% from 2021. A third (33%) of active lenders made five or fewer multifamily loans over the year.
Jamie Woodwell, head of commercial real estate research at MBA, said the relatively stable multifamily lending volume was largely a result of bank lending. MBA’s report is based on its surveys of the larger multifamily lenders and the recently released Home Mortgage Disclosure Act (HMDA) data that covers multifamily loans originated by many smaller lenders, particularly commercial banks.
However, Woodwell acknowledged the negative impact of the banking turmoil early this year on borrower demand and lending standards.
“Beginning in last year’s third quarter, rising and volatile interest rates, uncertainty about property values, and questions about some property fundamentals led to a fall-off in borrowing and lending across commercial property types, including multifamily,” he said. “Most capital sources saw a significant decline in lending activity in 2022, but bank activity increased by an almost equal amount. It’s unlikely that this momentum is occurring this year, given current evidence that banks have tightened underwriting standards and borrower demand has weakened.”
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The $480.1 billion multifamily loans originated in 2022 went to various types of lenders. By dollar volume, the greatest share (42% of the overall figure) went to depositories. The top five lenders by dollar volume were JP Morgan Chase & Company, Wells Fargo, Walker & Dunlop, Berkadia, and Capital One Financial Corp.
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