Today’s post is written by Michael Green, Senior Commercial Loan Originator with Counsel Mortgage Group, LLC. Mike writes monthly on the commercial mortgage market. Check back each month for his commentary.
Despite uncertainty in:
Ø the economy,
Ø the health and well-being of the CRE market,
Ø Fed policy and interest rate movements,
Ø the burdensome level of existing debt for all groups of borrowers,
Ø international turmoil and wars,
Ø domestic discord and outright violence,
Ø and the prospects of a new federal government,
the level of commercial/multifamily mortgage debt outstanding continued to increase in Q3-24.
The total level of commercial/multifamily mortgage debt outstanding increased by $47.7 billion (1.0%) in Q3-24, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding Quarterly Report.
Per Jamie Woodwell, MBA’s head of commercial real estate research every major capital source for CRE mortgage debt increased its holdings of mortgages during the Q3-24. Life insurance companies had the largest increase accounting for 44% of the increase, boosting their commercial mortgage investments by nearly 3%.
Comparing life insurance company activity with that of banks, commercial banks increased their balances of CRE mortgages during the quarter by only 0.3%.
Loan balances backed by multifamily properties increased more than those backed by other property types for 9 consecutive quarters.
In terms of outstanding loans, commercial banks continue to hold the largest share (38%) of commercial/multifamily mortgages at $1.8 trillion, far and away larger than agency, GSE and MBS portfolios which hold the second-largest position (22%) at $1.03 trillion.
While data for Q4-24 aren’t in yet, we suspect there was a slowdown in activity associated with the election. Following the presidential inauguration later this month, we expect to see an aggressive ramp-up from lenders as Trump policies are implemented during the much-talked-about first 100 days.
The implied question for you, our potential borrower, is when, where, and how do you step up to re-engage your loan process. Lenders have become more selective by asset class, geographic location, size of the loan, use of proceeds, and perhaps most importantly, the “strength” of the sponsor.
Our experience shows that borrowers who contact us have been trying to secure a loan on their own for 3 to 6 months – I recall one borrower who had been at it for 2 years! Perhaps, your first step should be to secure an ally? Give us a call – it won’t hurt!