A new survey of top mortgage originators conducted by the Mortgage Bankers Association suggests that multifamily and commercial lending numbers will increase substantially in 2016. This good news underscores other positive signs throughout the housing market. With an equity crisis in China causing global turbulence, housing is likely to serve as a safe haven for investments. Furthermore, pent-up demand caused by the recession is just beginning to give way.
With borrower demand comes the demand for lenders to make loans. One factor that?s likely to increase demand across the board is the many 10-year loans made in 2006 and 2007 maturing. The Mortgage Bankers Association found that among top mortgage originators:
? 90% expect mortgage originations to increase in 2016
? 50% expect a total increase of 5% or more
? 61% expect their own firm?s originations to increase by 5% or more
?Borrower Demand Remains High ? Borrowers have been jumping at the chance to take out loans, and survey participants are confident that will continue.
Strong ?Appetites? ? A full 100% of surveyed originators predicted borrowers to have a strong or very strong appetite for loans in 2016, and 97% expected lenders to have a strong or very strong appetite to make loans.
Predictions by Investor Group ? Loans from all major investor groups are expected to increase in 2016. The greatest projected increase is with commercial mortgage-backed (CMBS) securities. The following percentages represent the number of respondents who predict growth of more than 5%.
? CMBS ? 64 percent
? Pension and life insurance companies ? 48 percent
? Fannie Mae and Freddie Mac ? 43 percent
? Bank portfolios ? 41 percent
? FHA ? 27 percent
?Loan Returns – Loan returns are expected to remain moderate. Half of respondents characterized loans made in 2015 as low return, and only 30% said loans in 2016 would be low or very low return.
Loan Risk – Loan risk is expected to rise slightly in 2016. Just over half of survey respondents classified loans made in 2015 as ?medium risk.? Compare that with 41% of respondents expecting loans this year be ?high risk.? Last year, in the same survey, 31% of respondents saw their loans as high risk.
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