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MBA Forecasts 7 Percent Rise in 2015 Commercial/Multifamily Originations; Mortgage Debt Outstanding to Rise to $2.7 Trillion

Feb. 4, 2015--Van Raaphorst, Rob rvanraaphorst@mba.org; Tucker, Michael mtucker@mba.org
SAN DIEGO--The Mortgage Bankers Association projects originations of commercial and multifamily mortgages will grow to $414 billion in 2015, an increase of 7 percent from 2014, and continue to rise to $430 billion in 2016.

MBA projects multifamily mortgages originated by mortgage bankers are forecast to increase to $152 billion in 2015.

“Commercial and multifamily real estate finance markets are strong,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “Rising property values, improving property fundamentals, low interest rates and higher loan maturity volumes should all help boost mortgage borrowing and lending in the coming year.”

MBA said commercial/multifamily mortgage debt outstanding is expected to continue to grow in 2015, ending the year at $2.7 trillion, more than 3 percent higher than at the end of 2014.

"There is more money being lent on multifamily than we've ever seen," Woodwell said. "All the economic strength that we're seeing is coming into a commercial real estate market that's really pretty darn strong to begin with."

Banks, thrifts and other investor groups had a very strong appetite for mortgages in 2014, Woodwell said. "Fannie Mae and Freddie Mac had a strong year, coming right up to their caps," he noted. "Life companies and insurance funds had a record year as well. There is an awful lot of capital flowing into and through the system."

Additionally, Woodwell said, asking rent growth has improved among all property types. Multifamily leads the way, but other property types can turn up the volume a little bit as well," he said. "The bottom line with respect to net operating income is that we're seeing net operating incomes increasing."

Although prices dropped--by 40 percent peak to trough in some cases--higher-quality properties bounced back quickly," Woodwell said. "Secondary and tertiary properties bounced back a little more slowly but on average all indicies have regained the levels that we saw in 2007," he said. "If you happened to purchase a property in the trough of the market, you've seen really great price appreciation."

MBA released its forecast of the commercial/multifamily real estate finance markets this week at its Commercial Real Estate Finance/Multifamily Housing Convention & Expo.

MBA commercial/multifamily regular members and premium and select associate members can download a copy of the Commercial/Multifamily Real Estate Finance Forecast at www.mba.org/research.