The Mortgage Bankers Association (MBA) has projected that originations of commercial and multifamily mortgages into the US will total $500 billion in 2016, a hefty number given the volatility that the CRE finance market has experienced so far this year.
The number is not far off last year’s $504 billion in originations and the $508 billion record originated in 2007. As is well-known among industry participants, the CMBS market has been the most volatile of among the investor groups providing financing options, with spreads widening then fluctuating wildly earlier this year — and potentially coming out once again in the face of Brexit.
“The year has started off with more than its fair share of twists and turns,” said Jamie Woodwell, MBA’s VP of Commercial Real Estate Research, in a statement. But “solid originations for life companies, Fannie Mae, Freddie Mac and bank portfolios are expected to make-up for some – but not all – of the slowdown in the CMBS market this year.”
Mortgage banker originations of multifamily mortgages are forecast at $210 billion in 2016, with total multifamily lending at $273 billion. In addition, commercial/multifamily mortgage debt outstanding is expected to continue to grow in 2016, ending the year at $2.9 trillion, more than three percent higher than at the end of 2015.
“When all is said and done, commercial and multifamily real estate finance markets are likely to end 2016 with another strong year of borrowing and lending,” Woodwell said. “On the demand side, strong property fundamentals and prices should continue to support an active sales market, which will drive mortgage demand.”
But, he added: “Global economic uncertainty and a range of regulations that could affect the availability of CRE financing remain wildcards.”