Commercial Lending Outlook 'Uncertain,' MBA Says

Credit unions have made extraordinary gains this year in commercial real estate lending, but the Mortgage Brokers Association said a shaky economy is making further gains less certain.

On Monday, the MBA actually slightly raised its forecast for the year following three previous downward revisions. However, it slightly lowered its forecasts for 2023.

Jamie Woodwell, the MBA’s vice president for commercial real estate research, said he is confident of lending bouncing back in 2023 and 2024 because most commercial real estate market fundamentals remain strong, with significant increases in the incomes and values of many properties in recent years.

Then he said those fundamentals are tied to a wobbly economy.

“The outlook is particularly uncertain right now,” he said. “Should the economy enter a recession, which has become considerably more likely, commercial and multifamily borrowing and lending would likely be further constrained.”

Monday’s forecast showed total commercial real estate production this year will be $766 billion, down 14% from 2020. In July, it forecast $733 billion for the year, down 18%. In February it forecast $1 trillion.

Monday’s forecast also showed multi-family originations falling 6.6% to $455 billion. In July, it forecast multifamily falling 10% to $436 billion.

What the MBA did lower slightly was its forecasts for 2023. Monday’s forecast predicted total lending to rise 11% to $848 billion in 2023, compared with July’s forecast of $872 billion next year. The MBA on Monday said it expects multi-family to fall 1% to $451 billion next year, compared with the $454 billion in July’s forecast.

“We continue to see significant changes, volatility and uncertainty in the space, equity and debt markets that drive commercial real estate values and transaction volumes,” Woodwell said.

The MBA reported in August that commercial real estate originations among all lenders in the second quarter were up 19% from a year ago and up 15% from the first quarter. Multifamily production in the second quarter from all lenders rose 24% from a year ago and 18% from the first quarter.

Credit unions originated $14.4 billion in RE-backed commercial loans in the second quarter, up 82% from a year ago and up 36% from the first quarter. Multifamily originations were $6.2 billion up 86% from a year ago and up 44% from the first quarter.

The 10 largest producers in the second quarter originated $3.5 billion, up 55% from a year ago and more than double production in the first quarter. Their multi-family originations were $1.6 billion, up 53% from a year ago and up 113% from the first quarter. They were:

1. Greenstate Credit Union of North Liberty, Iowa originated $902.9 million in RE-backed commercial loans in the second quarter, up 329% from a year ago and up 379% from the first quarter. Multifamily originations were $345.4 million up 235% from a year ago and up 439% from the first quarter.

2. BECU of Tukwila, Wash., originated $468 million in RE-backed commercial loans in the second quarter, up 291% from a year ago and up 444% from the first quarter. Multifamily originations were $238.1 million up 191% from a year ago and up 398% from the first quarter.

3. Pentagon Federal Credit Union of McLean, Va., originated $341.3 million in RE-backed commercial loans in the second quarter, down 45% from a year ago and up 56% from the first quarter. Multifamily originations were $214.2 million up from none from a year ago and up 84% from the first quarter.

4. Bethpage Federal Credit Union of Bethpage, N.Y., originated $294.6 million in RE-backed commercial loans in the second quarter, up 30% from a year ago and up 31% from the first quarter. Multifamily originations were $145.9 million, up 301% from a year ago and up 32% from the first quarter.

5. Alliant Credit Union of Chicago originated $287 million in RE-backed commercial loans in the second quarter, up 58% from a year ago and up 69% from the first quarter. Multifamily originations were $151.1 million, down 12% from a year ago and up 415% from the first quarter.

6. Bellco Credit Union of Greenwood Village, Colo., originated $284.9 million in RE-backed commercial loans in the second quarter, down 4% from a year ago and down 6% from the first quarter. Multifamily originations were $365.4 million, down 23% from a year ago and down 31% from the first quarter.

7. Credit Union 1 of Rantoul, Ill., originated $254.1 million in RE-backed commercial loans in the second quarter, up 233% from a year ago and up 60% from the first quarter. Multifamily originations were $0 down 100% from a year ago and up from none from the first quarter.

8. Trustone Financial Credit Union of Plymouth, Minn., originated $241.1 million in RE-backed commercial loans in the second quarter, up 106% from a year ago and up 238% from the first quarter. Multifamily originations were $31.7 million, up 729% from a year ago and up 230% from the first quarter.

9. Lake Michigan Credit Union of Grand Rapids, Minn., originated $225.6 million in RE-backed commercial loans in the second quarter, up 223% from a year ago and up 99% from the first quarter. Multifamily originations were $22.7 million, up 17% from a year ago and down 4% from the first quarter.

10. Wings Financial Credit Union of Apple Valley, Minn., originated $181 million in RE-backed commercial loans in the second quarter, up 493% from a year ago and up 150% from the first quarter. Multifamily originations were $53.5 million, up 230% from a year ago and up 399% from the first quarter.