The Mortgage Bankers Association (MBA) recently reported another stellar year for commercial/multifamily mortgage originations in 2018. Although the MBA will release final data next month, results from its fourth quarter mortgage originations survey point to volume that could be 3 percent higher than the record $530 million reached in 2017.
In the midst of that continued robust lending, it is notable that bank lending took a step back with an estimated decline in mortgage origination volume of 10 percent. Yet industry experts have been quick to wave off any concerns that banks are tapping the brakes on lending.
“There are some areas that are more selective than others, but we don’t see a widespread pullback,” says Jeff Erxleben, executive vice president, regional managing director, for NorthMarq Capital in Dallas. The decline is likely due to a combination of factors, including a strong comparison year in 2017, more caution on construction lending and a highly competitive lending environment, he notes. However, banks continue to have a healthy appetite for commercial/multifamily loans and will remain an active player in the coming year, Erxleben adds.
Banks are facing more competition. Growth of non-bank lenders has added a whole new dimension to the competitive landscape, particularly in bridge and construction financing, notes Kathleen Farrell, executive vice president, line of business executive, commercial real estate, at SunTrust Banks. There are multiple bids on any opportunity or new project that needs construction financing. According to the MBA, GSEs and life companies increased loan originations by 16 percent and 10 percent respectively in 2018. Debt funds also saw a big jump of 29 percent from an estimated $52 billion in 2017 to $67 billion in 2018.
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Beth Mattson-Teig, National Real Estate Investor.