- Q2 CRE mortgage originations for commercial and multifamily properties rose 27% from Q1 and were up 3% YoY.
- Hotel, healthcare, and industrial led originations growth, while retail, office, and multifamily saw declines.
- Interest rates remain high, but higher borrower activity is expected, contingent on potential rate cuts from the Federal Reserve.
Mortgage originations for commercial and multifamily properties saw a strong uptick in Q2, up 27% from Q1, according to the Mortgage Bankers Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
As reported in GlobeSt, on a YoY basis, originations grew 3%, a modest improvement from last year’s trends, despite the challenges posed by high interest rates.
Sector Performance
The growth in originations was uneven across property types, with hotel, healthcare, and industrial properties leading the charge.
- Hotel originations skyrocketed 172% YoY and 84% from Q1.
- Healthcare originations also grew significantly, up 50% YoY and up 178% from Q1.
- Industrial originations experienced 77% YoY growth and are up 29% from Q1.
Meanwhile, other sectors faced declines.
- Office originations dropped 29% YoY, reflecting falling valuations and transaction volumes.
- Multifamily and retail also saw declines, with YoY drops of 14% and 7%, respectively.
Lender Dynamics
The data also revealed variations in activity by lender type. CMBS/conduit loans saw significant growth, with originations up 154% YoY and 21% QoQ. Life insurance companies and investor-driven lenders also reported notable growth in originations.
However, depositories and Fannie Mae/Freddie Mac lenders faced declines, reflecting ongoing caution in lending practices.
Market Outlook
Despite the recent uptick in originations, borrowing and lending activity remains subdued overall.
According to Jamie Woodwell, MBA’s head of CRE research, capital remains available for loans on properties that can support them, but the market is cautious amid high interest rates and looming maturations.
Looking ahead, borrower activity could grow over the next few quarters, depending on how the Federal Reserve adjusts the federal funds rate. While potential rate cuts could boost demand, it remains uncertain how much impact incremental decreases would have on the overall market.
