Lower interest rates are expected to drive financing secured by income-producing properties to new heights by year-end, according to the Mortgage Bankers Association.
The association's latest 2019 projection for lending on income-producing properties, at $652 billion, represents a 14% increase from upwardly revised 2018 numbers. The MBA's estimate for 2019 multifamily originations, which includes some loans not included in the overall total, is $359 billion.
"The low interest rate environment, coupled with continuously strong demand for commercial and multifamily assets, has pushed property values higher and increased demand for mortgages," Jamie Woodwell, vice president for commercial real estate research, said in a press release.
"At the beginning of the year, many economists, investors and other anticipated long-term rates would be around 3% [or higher] — potentially putting pressure on property values and decreasing demand for debt. Instead, the 10-year Treasury yield is at approximately 1.5%, and many market participants are planning for rates to remain 'lower for longer.' The result is heightened demand and higher volumes."
The group anticipates that commercial and multifamily originations could rise by another 7% in 2020 to an estimated $700 billion.
The MBA also recently released 2019 midyear rankings for commercial and multifamily servicers. The top five are Wells Fargo ($682 billion in primary and master servicing), PNC Real Estate/Midland Loan Services ($655 billion), KeyBank NA ($273 billion), Berkadia Commercial Mortgage ($268 billion) and CBRE Loan Services ($208 billion).
Primary servicers collect loan payments from borrowers, and perform property-related tasks. Master servicers generally collect cash and data from primary servicers and transmit that information to investors through trustees.
