Mortgage

Multifamily mortgage originations may drop by 10% in 2022

Multifamily mortgages had a banner year in 2021 and they’re doing better than anticipated in 2022, according to recent mid-year forecasts.

Originations totaled $487 billion last year, marking an all-time high, according to Mortgage Bankers Association research published Tuesday. In addition, volume this year is beating expectations, Freddie Mac’s research team said in a separate report. 

However, this sector of the market – which banks like HomeStreet have used to partially offset single-family declines — is not immune to pressure from higher rates. Freddie’s forecast calls for a 8% to 10% drop this year, compared to 2021.

“The pace of growth can be expected to moderate,” Steve Guggenmos, vice president, research and modeling at Freddie Mac, said in an online video presentation of the government-sponsored enterprises’ data. 

However, “moderation is not expected to derail the multifamily market this year,” he said.

In the the remainder of the year apartment loans may not match their record first-quarter numbers, when originations appear to have peaked; but overall 2022 volume will only be slightly lower than 2021’s and projections for property cash-flows remain relatively high, Guggenmos said.

“The very strong results from the first quarter push up full-year forecasts for rent growth in 2022 relative to expectations at the start of the year,” he said.

Freddie Mac’s analysis was based on its own internal data and other numbers from the Mortgage Bankers Association, the American Council of Life Insurers, and Intex Solutions.

Two banks and three non-depositories were the top five multifamily lenders in 2021, according to the MBA: Wells Fargo, JPMorgan Chase, Berkadia, Walker & Dunlop and CBRE. The MBA’s numbers are based on surveys and Home Mortgage Disclosure Act data.

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