Commercial, Multifamily Lending to Increase 11% in 2013

Posted on February 8, 2013

Lending on offices and apartment buildings is expected to rise this year, further evidence that the commercial real estate continues to strengthen.

Last year ended on a high note: originations of commercial and multifamily mortgages rose 49% in the fourth quarter of 2012 from the same period a year earlier. This year, lenders are expected to originate $254 billion commercial and multifamily mortgages, an increase of 11% from last year, according to a forecast published Monday by the Mortgage Bankers Association, a trade group that represents the real estate finance industry.

Jamie Woodwell, the Mortgage Bankers Association’s vice president of commercial real estate research, said in a news release that 2012 “was a strong year for the commercial and multifamily mortgage markets, and 2013 is shaping up to continue the growth. Despite a 21% decline in the volume of commercial and multifamily mortgages maturing this year, we expect origination volumes and the amount of mortgage debt outstanding will both increase.”

Woodwell added that Fannie Mae, Freddie Mac, the Federal Housing Administration and life insurance companies all “continue to have strong appetites” for lending, which the association expects to be augmented by an increase in demand for securities backed by commercial mortgages.

Overall, commercial and multifamily loans outstanding are predicted to grow 2% year over year, to $2.4 trillion, the group said.

Separately, Fannie Mae said Monday that financing it provided for apartment buildings in 2012 rose 38.5% from a year earlier, to $33.8 billion.

“Private capital continued to return to the market, an important step to restoring a more normal lending environment,” Jeffery Hayward, Fannie’s head of multifamily mortgage business, said in a press release. “Having a balanced market with diverse sources of liquidity and credit means the whole market is healthy and everyone is doing their part.”

Brian Browdie, American Banker.