Strong Showing for Commercial/Multifamily Originations

by devteam November 4th, 2011 | Share

Commercial and multifamily mortgagernoriginations turned sharply upward during the third quarter of 2011, rising 10rnpercent above levels in the second quarter and nearly doubling originations inrnthe third quarter of 2010.  Results ofrnQuarter Three lending was released by The Mortgage Bankers Association (MBA) onrnThursday in their Quarterly Survey of Commercial/Multifamily Mortgage BankersrnOriginations.</p

MBA said that the 98 percent overallrnannual improvement in commercial/multifamily lending was driven by increasesrnacross the board.  When compared to thernsame quarter in 2010, loans for hotel properties increased by 406 percent;rnretail properties by 164 percent and office properties 103 percent.  Loans for multifamily properties were up 39rnpercent.  Offsetting these strong gainsrnwere losses of 3 percent and 8 percent for industrial property and health carernproperty loans.  </p

The increased originations are reflectedrnin MBA’s Originations Index which rose from 70 in the third quarter of 2010 torn126 in the second quarter of 2011 to 138 in the quarter just ended.  The index peaked at 352 in Q2 2007 andrnbottomed out at 40 in Q1 of 2009.*</p

Originations increased across all lenderrntypes but lending by commercial banks soared, increasing 433 percent overrnlending one year earlier from an index of 32 to 169.  Lending by conduits for commercial mortgagernbacked securities (CMBS) was up 169 percent (although levels are still low; thernindex is 42).  Life insurance companiesrnincreased lending by 61 percent from an index of 176 to 282, and the GSEsrnFreddie Mac and Fannie Mae increased their lending by 47 percent from 120 torn176.</p

The average loan sizes alsornincreased.  For all loans the average wasrn$14.9 million compared to $10.5 million in Quarter 3 of 2010.  Loans from conduits averaged $40.5 million,rnunchanged year-over-year.  Commercialrnbank loans more than doubled in size from $4.9 million to $11.8 million; liferninsurance companies lent an average of $20.5 compared to $15.5 million andrnFreddie and Fannies’ average loan size rose from $12.6 million to $13.8rnmillion.  </p

“Lendingrnon commercial and multifamily properties continues,” said Jamie Woodwell,rnMBA’s Vice President of Commercial Real Estate Research. “Mortgagernoriginations by life company portfolios hit another new record in the thirdrnquarter, and lending by bank portfolios and Fannie Mae and Freddie Mac alsornpicked-up. Mortgage originations for the CMBS market, which was caught up inrnthe global economic uncertainty of recent months, declined from last quarter,rnbut were higher than last year’s Q3 level.”</p

Quarterlyrnchanges in originations were also impressive; retail property loans increasedrnby 37 percent, office properties 8 percent, hotel properties 4 percent, multi-familyrnproperties 2 percent.  The remaining two propertiesrntypes fell in quarterly statistics as well as annual; industrial propertyrnoriginations were down 14 percent and health care properties 30 percent. </p

Amongrninvestor types, between the second and third quarters of 2011, loans forrncommercial bank portfolios saw an increase in loan volume of 55 percent, loansrnfor GSEs 32 percent, and originations for life insurance companies 3 percent.  Loans for conduits for CMBS decreased by 48rnpercent.</p

*The Index has a base of 100 = thernaverage originations per quarter in 2001.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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