Since the housing market has been often associated with the overall economy, it was no surprise that the burst of the housing bubble in 2008 led to a global financial crisis. But the area of the real estate market that hasn’t received the amount of attention as single-family homes is commercial and apartment buildings, and lending for both is expected to increase in this coming year.
When purchasing a home became more difficult when mortgage lending dried up after the crisis, more families began looking into renting instead. The construction and purchase of new apartment buildings followed – and more are continuing to pop up. A Mortgage Bankers Association study found that commercial and multifamily mortgage orginations increased by 49 percent in the fourth quarter of 2012 from the previous year.
In all, more than $254 million is expected to lent out for commercial and multifamily buildings. While this suggests positive news – increased lending will provide more profits for banks, and this signals an increase in buildings for more offices and businesses – it also suggests possible changes where families live. While a house and a mortgage was once the norm, studies have found that now that the average monthly payment for rent is cheaper than a mortgage. For first-time homebuyers with the recession still on their minds, some may choose to rent for longer than what was typical in the past.
For lenders, not only does loan application software help originators prepare for the increase of commercial and multifamily loan applications, but, as families and individuals change how they view homebuying, it is also possible that trends could change in the future. In addition to preparing for an increase in applications, banks may consider investing in process automation software. With so many changes in the past five years in terms of renting and owning, as well as new mortgage rules and regulations, software can help originators keep up.