Magazine article Mortgage Banking

MBA: Q2 Commercial/multifamily Originations Set Record

Magazine article Mortgage Banking

MBA: Q2 Commercial/multifamily Originations Set Record

Article excerpt

COMMERCIAL AND MULTIFAMILY MORTGAGE loan originations set a new record during the second quarter of 2005, according to the Mortgage Bankers Association.

MBA's quarterly survey of commercial/multifamily mortgage loan originations showed the $44.4 billion in loan originations reported for the second quarter was 25 percent higher than what the survey recorded for the second quarter of 2004 and 41 percent higher than the first quarter of 2005.

Second-quarter originations were also 4 percent higher than in fourth-quarter 2004, which had previously been the largest single quarter for origination volume, according to the MBA survey. MBA also reported that year-to-date loan originations were 31 percent ahead of where they were the same time a year ago.

"Capital continues to flow into the commercial and multifamily real estate markets on both the debt and equity sides," noted Doug Duncan, MBA chief economist and senior vice president, research and business development. "And so far, no significant obstacles to that flow have appeared, whether in the form of higher interest rates, declining loan performance or declining property performance."

The increase in second-quarter commercial/multifamily lending activity was across all property types. The $8.9 billion increase over the second quarter of 2004 included a 26 percent increase in loans for office buildings; a 14 percent increase in loans for multifamily properties; a 27 percent increase in loans for retail; and a 34 percent increase in loans for industrial space. The largest percentage increase in lending was for hotel properties, which saw a 189 percent increase from the second quarter of 2004, according to MBA.

Among investor types, commercial banks and CMBS conduits drove the overall increase. Mortgage bankers' originations for conduits increased 91 percent from the second quarter of 2004; originations for commercial banks increased by 83 percent; and originations for life insurance companies rose 3 percent.

Originations for Fannie Mae dropped by 13 percent, originations for Freddie Mac fell by 47 percent, originations for Federal Housing Administration (FHA) loans declined by 34 percent and originations for pension funds decreased by 75 percent. …

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