Life Companies Aim to Maintain Their Lending Levels in 2020
December 18, 2019 | Beth Mattson-Teig | National Real Estate Investor
Life insurance companies are holding their own in the competitive commercial real estate lending market and exhibiting a growing appetite for multifamily loan originations.
According to the Mortgage Bankers Association (MBA), life companies originated $83 billion in commercial and multifamily loans in 2018. The Mortgage Bankers Originations Index shows that life originations rose by 6 percent in 2018 compared to an overall decline in origination volume of 1 percent. Originations inched higher by another 3 percent during the first three quarters of 2019. Although that shows steady growth, it does trail behind the broader market increase of 9 percent, according to the MBA.
The majority of life companies are planning to do at least the same level of lending in 2020 as they did in 2019, and they will take more if they can get it, notes Pat Minea, executive vice president and regional managing director in the Minneapolis office of NorthMarq, a capital markets firm that assists clients with debt, equity, investment sales and loan servicing. Commercial real estate loans continue to look very attractive on a risk-adjusted return basis compared to alternatives such as corporate bonds. Interest rate volatility earlier this summer also gave life companies an edge over some competitors.
