- Commercial and multifamily mortgage originations increased 59% YoY in Q324 and 44% QoQ, per the Mortgage Bankers Association (MBA).
- Lower interest rates in Q3, including a drop in the 10-year Treasury yield, fueled the lending surge.
- Healthcare properties led the growth with a 510% increase in loan originations, followed by hotels (+99%) and retail (+82%).
- Investor-driven lenders and CMBS saw significant YoY increases in dollar loan volumes, rising 62% and 260%, respectively.
After a sluggish start to 2024, commercial and multifamily real estate borrowing surged in Q3, buoyed by a decrease in long-term interest rates, as reported by Multi-Housing News. The average yield on the 10-year Treasury dropped from 4.31% in June to 3.72% in September, driving investor and lender activity.
However, recent increases in long-term rates could temper this momentum in Q4 and beyond, as lending activity varies significantly by property type and market conditions.
Source: MBA
Year-Over-Year Trends
Commercial and multifamily borrowing saw varied performance across property types:
- Health Care Properties: +510%
- Hotels: +99%
- Retail Properties: +82%
- Industrial Properties: +57%
- Multifamily Properties: +56%
- Office Properties: -3%
CMBS experienced the largest jump by investor type, up 260% YoY. Depository loans rose 69%, investor-driven lenders increased 62%, and life insurance company loans were up 31%. Loans from government-sponsored enterprises (GSEs), including Fannie Mae and Freddie Mac, rose 28%.
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Quarterly Comparison: Q3 vs. Q2 2024
On a quarterly basis, loan originations also showed robust growth across most property types:
- Health Care Properties: +191%
- Retail Properties: +56%
- Multifamily Properties: +53%
- Office Properties: +42%
- Industrial Properties: +21%
- Hotel Properties: -25%
Among investors, depository loans led the growth with an 86% quarterly increase, followed by GSEs (+55%) and life insurance companies (+40%).
Looking Ahead
The third-quarter rebound underscores the influence of fluctuating interest rates on lending. While the drop in rates boosted Q3 activity, recent increases in long-term yields could dampen future borrowing trends.
Developers and lenders will continue to navigate a complex environment. In the months ahead, property type, business plans, and market dynamics will drive originations.
