CRE Lending Expected to Increase in 2021
Commercial real estate investors are bullish that the market will rebound and investment activity will pick up by 50% in Q2 2021. The vaccine rollout will allow for economic activity to resume to normal levels. The steep declines in mortgage borrowing and lending experienced in 2020 should partially reverse in 2021. This will bring greater stability to the markets, but with continued differentiation by property type.
The COVID-19 pandemic took a toll on the capital market industry. There is a separation in fundamentals among property types. For example, industrial real estate, healthcare, data centers, multifamily, and self-storage have been positively disrupted. As such, lenders and equity investors are expected to continue looking favorably on these more durable property types.
Commercial and multifamily mortgage bankers are expected to closed $486 billion of loans backed by income-producing properties in 2021, an 11 percent increase from 2020’s estimated volume of $440 billion, according to a new forecast released by the Mortgage Bankers Association (MBA). Further MBA stated that total multifamily lending alone, which includes some loans made by small and midsized banks not captured in the overall total, is forecast to rise to $323 billion in 2021 – a 7 percent increase from 2020’s estimated total of $302 billion.