MBA: Pandemic will lead to commercial/multifamily loan pullback in 2020


U.S. commercial and multifamily mortgage lenders are expected to complete $248 billion in loans secured by income-generating real estate in 2020, according to new forecast released Thursday (July 16), according to the Association of Mortgage Lenders ( MBA).

Total multifamily lending alone, which includes some small and medium-sized bank loans not included in the total, is projected to grow 42% to $213 billion in 2020.

“The ongoing COVID-19 pandemic continues to disrupt the commercial and multifamily real estate markets. Forecasting is difficult given the social and economic responses to the virus, but we expect start-ups to decline significantly this year before experiencing a strong, partial recovery in 2021,” said Jamie Woodwell, vice president of commercial real estate research at MBA . “Net operating income, property values ​​and cap rates across property types are expected to experience varying degrees of stress in the coming months, with hotel and retail properties already being hit the hardest.”

MBA expects a partial recovery in lending in 2021, with activity rising to $390 billion in commercial mortgage bank origination and $308 billion in multifamily home lending.

“The multifamily sector has held up reasonably well so far, with the federal government’s stimulus measures for the unemployed helping tenants make their rent payments,” Woodwell said. “Should this support hold as the economy recovers, the housing market is likely to remain relatively balanced.”

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