Commercial, multifamily lending expected to grow in 2017

2017 is expected to be another strong year for commercial and multifamily mortgage lending, according to the Mortgage Bankers Association.

According to a new MBA survey of the top commercial and multifamily mortgage origination firms, 63% of the top firms expect originations to increase in 2017, with 26% expecting an increase of 5 percent or more. About half of respondents expect their own firm’s originations to increase by 5% or more, the survey found.

“Commercial mortgage bankers expect 2017 to carry-over much of the momentum from 2016,” Jamie Woodwell, MBA’s vice president for commercial real estate research, said in a news release about the survey. “Most of the top firms expect strong demand from both lenders and borrowers in 2017, although not quite as strong as 2016. Originators generally see borrowing and lending volumes growing slightly, with just over half expecting potential regulatory and legislative changes to be positive for the market.”

According to the release, specific findings of the survey include:

• 96% of originators reported that in 2016 lenders had a “strong” or “very strong” appetite to make new loans, and 77% expect lenders’ appetite to be “strong” or “very strong” in 2017.

• 80% of originators reported that in 2016 borrowers had a “strong” or “very strong” appetite to take out new loans, and 69% expect borrowers’ 2017 appetite to be “strong” or “very strong.”

• 92% of originators reported that in 2016 their own firm had a “strong” or “very strong” appetite to make new loans, while 85% expect their own firm’s appetite to be “strong” or “very strong” in 2017.

• Loan returns are expected to increase in 2017. About 50% of respondents characterized the loans made in 2016 as having “somewhat” or “very low” return, while only 30% expect loans to be “somewhat” or “very low” return in 2017.

• Loan risk is expected to increase slightly in 2017. Most respondents (53%) expect loans to be medium risk, with the reminder evenly split between seeing higher and lower risk loans.

• 52% of respondents expect potential regulatory and legislative changes could be positive for the market. About 28% anticipate a neutral impact and 20% see potential negative impacts.

The 2017 MBA CREF Outlook Survey was conducted between Dec. 2-Dec. 22, 2016. It was sent to leaders of 60 of the top commercial/multifamily mortgage origination firms and had a response rate of 50%, according to the release.

By |2019-11-25T07:32:34-06:00January 19th, 2017|Financial Services|0 Comments

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