A recent survey by the Mortgage Bankers Association indicated that commercial and multifamily lending is expected to increase in the coming year, as lenders seek to expand and reach new customers.
The survey showed 91 percent of commercial and multifamily mortgage origination firms expect originations to increase in 2014, and nearly half expect an increase of five percent or more. Almost two-thirds expect their own firm’s originations to rise by five percent or more.
“Commercial and multifamily lenders anticipate a market in which lending continues to grow and their firm gets a bigger piece of the pie,” MBA Vice President for Commercial Real Estate Research Jamie Woodwell said. “Borrowers’ appetites to take out new loans are expected to remain strong, but perhaps drop a bit from 2013 levels. The resulting competition to lend leads originators to expect loan risk to increase marginally in the face of moderating returns.”
While lenders are expected to have a greater desire to make loans in 2014, borrowers are expected to show less interest in taking out new loans. Sixty-five percent of respondents expect lenders to have a “very strong” desire to make loans—up from 53 percent in 2013—while 23 percent expect borrowers to have a “fair” appetite to take out new loans, compared to 16 percent last year.
Loans for commercial mortgage-backed securities, banks and life companies are expected to increase in the coming year, while Fannie Mae, Freddie Mac and Federal Housing Administration loans are expected to decrease.