The first quarter of this year was, to be charitable, something of a mess for commercial and multifamily mortgage loan originations – according to new data from the Mortgage Bankers Association (MBA), originations were down by 42% from the previous quarter and down 56% from the first quarter of 2022.
Year-over-year decreases in originations impacted all major property types: a 72% collapse in the dollar volume of loans for industrial properties, a 69% plummet for health care properties, a 67% nosedive for office properties, a 55% tumble for multifamily properties, and relatively mild (in comparison) 8% drops for both hotel properties and retail properties.
“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, MBA’s head of commercial real estate research. “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. As loans mature and adjustable-rate loans reset, we should start to get greater insights into where things stand.”
Until then, however, the dust is only now settling. For a quarter-over-quarter measurement, the dollar volume of loans for life insurance companies decreased 56% while loans for depositories were down 48%, originations for investor-driven lenders fell 42% and loans for GSEs sank by 40%. Bucking this downward trend was the dollar volume of loans for CMBS – that witnessed a 99% increase.
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