According to a newly released Mortgage Bankers Association survey of the top commercial and multi-family mortgage origination firms, commercial and multi-family lending is expected to increase in 2015.
According to Jamie Woodwell, MBA’s Vice President for Commercial Real Estate Research, “Commercial mortgage lenders anticipate another competitive year in 2015. Lenders’ appetites for loans remain very strong, and with the 10 year loans made during 2005, 2006 and 2007 maturing, lenders also anticipate growing demand from Borrowers.”
Key survey findings include:
- A full 100 percent of the responding firms expect originations to increase in 2015, with 68 percent expecting an increase of 5 percent or more. 72 percent expect their own firm’s originations to increase by 5 percent or more.
- In 2014, lenders were more eager to make loans than borrowers were to take out loans. A “very strong” appetite among lenders (87 percent of respondents) to make new loans in 2014 faced a generally “strong” appetite among borrowers to take out new loans (57 percent 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. Compared to 2014, a similar share of respondents expect lenders to have a “very strong” desire to make loans (83 percent anticipate “very strong” appetite versus 87 percent in 2014) and more expect borrowers to have a “very strong” appetite to take out new loans (50 percent versus 43 percent in 2014).
- Originators expect the market to grow at a strong pace 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 percent anticipate growth to be greater than 5 percent), bank portfolios (56 percent anticipate growth to be greater than 5 percent), Fannie Mae and Freddie Mac (46 percent anticipate growth to be greater than 5 percent), pension/life insurance companies (41 percent anticipate growth to be greater 5 percent) and FHA (19 percent anticipate growth to be greater than 5 percent).
As it relates to other trends in the commercial sector, in their 2015 Real Estate Value Trends, Integra Realty Resources predicts positive value appreciation across all property types nationally, with expectations that the strongest growth will be seen in the industrial, lodging and multifamily sectors. In terms of capitalization rates, IRR market participants and offices were surveyed and the respondents predict that capitalization rates will remain relatively steady in 2015.
The trends noted herein confirm what VMG has experienced during much of 2014 – an overall increase in commercial appraisal activity nationally, and particularly in the industrial and multifamily sectors, as well as stable cap rates in most markets. As we closed out 2014 and welcomed the first month of the New Year, our commercial appraisal activity has increased from the same period a year ago – leading us to feel optimistic about growth in the commercial sector during 2015.
Valuation Management Group is a national, full service appraisal management company that manages the appraisal process for community banks, mortgage bankers and credit unions. We offer the full array of commercial and residential appraisal products and services. We take the process from ordinary to extraordinary.