-
Fierce competition, a run-up in prices, and an expected jump in interest rates in the years ahead could spell bad news for banks that hold multifamily loans on their balance sheets. Cheap financing from Fannie and Freddie is also fueling concerns of a bubble.
February 8
Mortgage loans on commercial properties rose sharply in the second quarter due largely to investors' heightened interest in apartment buildings.
Originations in the commercial and multifamily sector increased by 7% on the quarter compared to the second quarter of 2012 and 36% compared to the first quarter of 2013, the Mortgage Bankers Association said Tuesday. Multifamily originations drove the increase, as the dollar value of multifamily loans rose by 31% compared to the second quarter of 2012.
"The apartment market continues to be the belle of the ball, with multifamily mortgage originations running 31% ahead of last year's first half total," Jamie Woodwell, the MBA's vice president of commercial real estate research, said in a news release. "And after a slow start to the year, lending by life insurance companies surged in the second quarter to record the highest quarterly volume on record for that sector."
The dollar value of hotel loans originated rose 3% compared to the same period in 2012, while the value of office and industrial properties originated remained unchanged. The dollar value of retail originations dropped 14%, while the value of health care properties dropped 36%.
Commercial and multifamily mortgage originations have risen by 8% in 2013 compared to last year through the second quarter.
