The Mortgage Bankers Association (MBA) is projecting originations of commercial and multifamily mortgages will hit $230 billion this year, an increase of 17% from 2011 volumes, and continue to rise to $290 billion in 2015.
However, the MBA is also projecting that commercial and multifamily mortgage debt outstanding will also grow this year, reaching more than $2.4 trillion by the end of December – 2% higher than at the end of 2011. By the end of 2015, mortgage debt outstanding is forecast to exceed $2.5 trillion.
‘Our forecast anticipates continued strength in lending by life companies and the [government-sponsored enterprises], increased lending by banks and others, and a slow but steady return in [commercial mortgage-backed securities] (CMBS) activity,’ says Jamie Woodwell, the MBA's vice president of commercial real estate research. ‘Low loan maturity volumes over the next few years, coupled with moderate sales transaction activity, will mean that a relatively robust supply of mortgage capital will be a catalyst for deal activity.’
The MBA also predicts that 10% of commercial and multifamily mortgages held by nonbank lenders and investors – roughly $150.6 billion – will mature this year, a 3% decline from the $154.7 billion that matured in 2011 and an 18% decline from 2010.
Meanwhile, the MBA reports that commercial and multifamily originations during the fourth quarter of 2011 fell 7% from the third quarter, although they were up 13% over the fourth quarter of 2010.
‘In the fourth quarter, multifamily originations for Fannie Mae and Freddie Mac hit a new all-time high,’ says Woodwell. ‘While the CMBS market continued to be held back by broader capital markets uncertainty during the past year, others – like the GSEs, life companies and many bank portfolios – increased their appetite for commercial and multifamily loans.’