Multifamily lending hit $364.4bn in total originations in 2019

Mortgage originations of multifamily properties hit a record high in 2019, driven by a combination of strong fundamentals, rising property values, and low interest rates.

Around 2,589 multifamily lenders nationwide originated a total of $364.4 billion in new mortgages last year for apartment buildings with five or more units, according to the Mortgage Bankers Association’s annual report of the multifamily lending market.

Prior to the coronavirus outbreak, MBA forecasted multifamily originations would jump 9% to $395 billion in 2020, beating 2019’s record. The pandemic, however, may change that.

“Last year’s numbers pointed to a robust and diverse multifamily lending environment, but conditions have changed with the onset of the COVID-19 pandemic, the greatest being increased uncertainty,” said Jamie Woodwell, vice president of commercial real estate research at MBA. “Interest rates are now lower than they were a year ago, and data has yet to show any marked changes in property incomes or values. Demand for refinancing because of low rates, particularly for government-backed loans, is unlikely to overcome a drop in sales transactions, which means multifamily borrowing and lending is likely to drop this year.”

The $364.4 billion multifamily lending volume in 2019 is 7% higher than the previous record high of $339.2 billion set in 2018. The report also showed that 44% of active lenders made five or fewer multifamily loans over the course of last year.

By dollar volume, 38% of the total multifamily mortgages originated in 2019 went to Fannie Mae and Freddie Mac. The top five multifamily lenders by dollar volume were JP Morgan Chase & Company, Wells Fargo, CBRE, Berkadia, and Walker & Dunlop.

“By loan count, multifamily lending came from a wide range of firms, with many making only a handful of loans,” Woodwell said. “By dollar volume, activity was once again driven by a relatively small number of dedicated multifamily lenders.”