Commercial Loan Originations on the Rise

According to Jamie Woodwell, VP of Commercial Real Estate Research at the Mortgage Bankers Association, “Rising property values, improving property fundamentals, lower interest rates and higher loan maturity volumes should all help boost mortgage borrowing and lending in the coming year.”
The Mortgage Bankers Association (MBA) predicts that originations of commercial and multi-family mortgages will grow to $414 billion in 2015. This is an increase of 7% over last year.

In fact, according to the MBA’s quarterly survey of the top commercial and multi-family mortgage originations firms, there was an 11 % increase in loan originations during the fourth quarter of 2014. Multi-family and industrial properties had the most loan originations during that time period.

The MBA quarterly survey also concluded that:

  • In 2014, there was a “very strong” appetite among lenders (87 % of respondents) to make new loans and generally a “strong” appetite among borrowers to take out new loans (57 % of respondents).
  • In 2015, lenders are expected to have a similar appetite to place loans, and borrowers a slightly stronger appetite to take out loans.
  • Originators expect the market to grow at a strong pace in 2015 (and their own firms to grow more quickly). Two thirds (68 %) of respondents expect total market originations to increase 5 % or more in 2015.
  • Loans for every major investor group are expected to increase in 2015. Originations are expected to increase lending for commercial mortgage-backed securities (89 % anticipate growth to be greater than 5 %), bank portfolios (56 % anticipate growth to be greater than 5 %), Fannie Mae and Freddie Mac (46 % anticipate growth to be greater 5 %), pension/life insurance companies (41 % anticipate growth to be greater 5 %) and FHA (19 % anticipate growth to be greater 5 %).
  • Loan risk is expected to increase in 2015. Most respondents characterized the loans made in 2014 as “medium” risk (73 %). In 2015, more respondents expect loans to be “somewhat high” risk (38 % versus 9 % in 2014).

The overall take-away is … refinance now if you can and don’t delay!

Better economic conditions and a big increase in competition mean lenders are willing to slash their rates for good prospects. However, it is difficult to determine how long this lending environment will last. Loans maturing in 2015 will begin competing for loan dollars with the higher quality loans that mature in 2016 and 2017. When this occurs, the opportunity to qualify for a new CMBS loan will begin to deteriorate.

If you have a loan maturing from 2015 – 2017, now is the time to get off the sidelines and strike before rates rise and the competition for loan dollars heats up.

In order to leverage the opportunities associated with the current lending environment, you will most likely need to defease your commercial real estate loan. We’re here to help! Contact us today to learn how you can Defease With Ease®.