Commercial and Multifamily Mortgage Originations Increase in Q2, But Remain Flat Over Last Year

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According to the Mortgage Bankers Association's (MBA) quarterly survey of commercial and multifamily mortgage bankers originations, second quarter 2010 commercial and multifamily mortgage loan originations were one percent higher than during the same period last year and 35 percent higher than during the first quarter.

"Borrowing remains light as few commercial property owners are selling or refinancing their properties unless they have to," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "Life insurers, CMBS conduits and others are back in the market and lending, and rates are at extremely attractive levels. However, low volumes of property sales, depressed property values, stressed cash flows and modest loan maturities are all keeping borrowing to a minimum."

Among the key findings in the report are:

• Second quarter commercial and multifamily mortgage originations were flat from last year's levels, and increased 35 percent from first quarter volumes.

• Originations for life insurance companies and CMBS conduits increased dramatically on a percentage basis.

• Originations for Fannie Mae and Freddie Mac fell by more than half from 2009 levels.

• On an absolute level, volumes remain low.

SECOND QUARTER 2010 ONE PERCENT HIGHER THAN SECOND QUARTER 2009

The one percent overall increase in commercial/multifamily lending activity during the second quarter was driven by increases in originations for office and industrial properties.  When compared to the second quarter of 2009, the increase included a 183 percent increase in loans for industrial properties, a 180 percent increase in loans for office properties, an 18 percent increase in loans for hotel properties, a 76 percent decrease in loans for health care properties, a 25 percent decrease in multifamily property loans, and a nine percent decrease in retail property loans.

Among investor types, loans for conduits for CMBS saw an increase of 173 percent compared to last year's second quarter.  There was also a 148 percent increase in loans for life insurance companies, a 12 percent decrease in loans for commercial bank portfolios, and the dollar volume of loans for Government Sponsored Enterprises (or GSEs - Fannie Mae and Freddie Mac) saw a decrease of 55 percent.

SECOND QUARTER 2010 35 PERCENT HIGHER THAN FIRST QUARTER 2010

Second quarter 2010 mortgage originations were 35 percent higher than originations in the first quarter of 2010.  Among investor types, loans for conduits for CMBS saw an increase in loan volume of 106 percent compared to the first quarter, loans for life insurance companies saw an increase in loan volume of 57 percent compared to the first quarter, originations for GSEs increased 21 percent from the first quarter to the second quarter of 2010, and loans for commercial bank portfolios decreased by two percent during the same time span.

Compared to the first quarter, second quarter originations for hotel properties saw a 405 percent increase. There was a 114 percent increase for industrial properties, a 107 percent increase for health care properties, a 56 percent increase for office properties, a 38 percent increase for multifamily properties, and an 11 percent decrease for retail properties.

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