The Mortgage Bankers Association (MBA) is projecting a double-digit increase in lending in US commercial real estate mortgages over 2012. This works out to $254 billion in loans.
Analysts are predicting the momentum to continue throughout the rest of the year. Even though most sectors saw volume boosts, the greatest gains came in the hotel sector.
The index was up 49 per cent between the third and fourth quarters of 2012. It was also up 49 per cent compared to the fourth quarter of 2011. This increase includes the following figures:
The increase in activity will mean more competition between borrowers and changing loan terms. Private funds are aggressively entering the market and providing an option for commercial property investors.
They are proving to be tough competition for established lenders by approaching property owners 12 or 18 months in advance of loans maturing to discuss their refinancing options and offer prepackaged modifications for consideration.
Loan maturities will be manageable in 2013. Approximately 8 per cent, or $119.5 billion, of commercial and multifamily mortgages currently held by non-bank lenders and investors will mature this year. This figure is 21 per cent lower than the $150.6 billion in mortgages that matured in 2012, according to MBA.