MBA Lowers Commercial Real Estate Forecast as Many CUs Thrive
Data shows gains by credit unions is on par with that of banks and other lenders last year.
Credit unions kept pace with other lenders last year when gains were strong for commercial real estate loans, but the Mortgage Bankers Association on Monday said this year’s market will be flat overall.
The revised MBA forecast expects total commercial real estate originations this year will be $895 billion, less than 1% above its $891 billion estimate for 2020. In 2023, it said it expects production will rise 6% to $950 billion. In February, the MBA forecast that total commercial and multifamily mortgage borrowing and lending would rise more than 12% to top $1 trillion for the first time in 2022.
Multi-family housing loans are expected to rise 11% to $418 billion this year, and rise about 6% to $442 billion in 2023. The MBA previously forecast multi-family housing loans would rise 26% to $474 billion in 2022.
Jamie Woodwell, the MBA’s vice president of commercial real estate research, said the downward revisions were triggered by shifts in the economic and interest rate outlook since February.
“The rapid rise in interest rates is expected to take some wind out of the sails of new lending activity, but healthy property fundamentals and strong property values should support the markets and keep commercial real estate mortgage demand at strong levels,” Woodwell said. “Borrowing and lending should still match last year’s record levels.”
The MBA on Thursday released a report showing all lenders originated $890.6 billion in commercial real estate loans last year, up 45% from 2020.
NCUA data released in early March showed credit union production of real estate-backed commercial loans was $37.1 billion last year, up 44% from 2020.
Woodwell said multifamily properties saw the highest origination volume last year, followed by office buildings, industrial properties, retail, hotel/motel and health care. First liens accounted for 94% of the total dollar volume closed.
“Improving property fundamentals and strong price appreciation drove borrowing and lending backed by commercial and multifamily properties to new highs in 2021, with strong activity from every capital source,” he said. “Lending was 48% higher than any previous annual total for industrial properties and 31% higher for multifamily properties. Despite bounce-backs from low 2020 volumes, lending for other major property types remained below previous highs.”
In both 2020 and 2021, credit unions accounted for 4.2% of total loan production, up from 2.9% in 2019.
In the fourth quarter, credit union commercial real estate loan production was $11.1 billion, up 44% from 2020’s fourth quarter.
Comparing the MBA and NCUA data also showed that credit unions made bigger gains for multi-family housing. Their originations rose 48% to $9.6 billion, while loans for other lenders rose 31% to $376 billion.
In 2021, the 10 largest credit union originators of commercial real estate loans produced $7.5 billion, more than double the amount from 2020. They were:
1. Pentagon Federal Credit Union of Tysons, Va., just outside Washington, D.C. ($32.5 billion, 2.6 million members) produced $1.5 billion, rising 15-fold.
2. Greenstate Credit Union of North Liberty, Iowa, a suburb of Iowa City ($9 billion, 338,048 members), produced $1.1 billion, up 83%
3. Bellco Credit Union of Greenwood Village, Colo., in the Denver area ($6.2 billion, 350,513 members) produced $967.6 million, rising three-fold.
4. Bethpage Federal Credit Union of Bethpage, N.Y., on Long Island ($11.5 billion, 432,699 members) produced $691.5 million, up nearly three-fold.
5. Alliant Credit Union of Chicago ($15.2 billion, 646,111 members) produced $650.8 million, up 78%.
6. BECU of Tukwila, Wash., in the Seattle metro area ($30.2 billion, 1.3 million members) produced $605.2 million, up 32%.
7. American Heritage Federal Credit Union of Philadelphia ($4 billion, 247,199 members) produced $548.4 million, up 97%.
8. Unify Financial Federal Credit Union of Los Angeles ($3.6 billion, 268,088 members) produced $529.4 million, up 155%.
9. Trustone Financial Credit Union of Plymouth, Minn., 15 miles west of downtown Minneapolis ($4 billion, 198,711 members) produced $470.9 million, up 163%.
10. University First Federal Credit Union of Salt Lake City ($1.7 billion, 116,135 members) produced $467.7 million, up 79%.