C
ommercial real estate lending activity picked up significantly in the third quarter of 2024, according to the Mortgage Bankers Association (MBA). Commercial and multifamily mortgage originations surged 59% year-over-year and 44% from the previous quarter.
A decline in long-term interest rates played a key role in this increase. Jamie Woodwell, MBA's head of commercial real estate research, noted that lower yields on 10-year Treasury bonds encouraged investors to enter the market.
Loan originations for various property types showed varying growth. Health care properties saw a remarkable 510% year-over-year increase, while hotel and retail properties also experienced significant gains. In contrast, office property loan originations declined by 3%.
On a quarterly basis, health care property loans rose 191%, with retail and multifamily properties also seeing notable increases. Hotel property loan originations dropped 25% from the previous quarter.
Investor interest in commercial mortgage-backed securities (CMBS) and depository loans drove this growth. CMBS saw a 260% year-over-year rise, while depository institutions increased their lending by 69%. Other types of investors also showed significant increases, including life insurance companies and government-sponsored enterprises like Fannie Mae and Freddie Mac.
Woodwell cautioned that each property and loan is unique, with various factors influencing borrowing and lending activity. These factors will likely impact the market in coming quarters.
