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Commercial Borrowing Cut In Half Due to COVID Disruption

August 17, 2020

According to a new Mortgage Bankers Association report, mortgage origination in the commercial space is down 48% year over year. This outcome is a symptom of the lending halt due to the current pandemic. Since the shock to the market in March, there has been a steady increase, although it will be a while before we get back to pre-corona figures.

Hospitality properties have been hit the hardest with a decline of 91% year over year. Declines for other property types include retail, decreasing 64%; office, falling 71%; industrial, sliding 44%; healthcare, dropping 40%; and multifamily, declining 24%. The shining star of the group (if any) is the multifamily sector, which only saw a 5% decrease with Fannie loans. 

As underwriting remains hyper-conservative, there is no surprise that bank lending has decreased by 55% from this time last year.

The Takeaway:

  • Credit will remain tight for the short term
  • The deals with the most value will have a difficult time getting financed, which open an opportunity for those with cash on hand
  • Multifamily is the taking the least hit