Washington, DC (November 15, 2007) – Commercial and multifamily mortgage bankers' loan originations dipped in the third quarter, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. Down from the second quarter, third quarter originations were four percent lower than during the same period last year. The year-over-year decrease was seen across most property types and investor groups.
 
Decreases in total commercial/multifamily mortgage originations were led by a drop in commercial mortgage-backed security (CMBS) conduit loans and commercial bank loans. These numbers show the impact of the recent credit crunch and other market disruptions.

“The on-going credit crunch slowed the volume of commercial/multifamily mortgage originations in the third quarter,” said Jamie Woodwell, MBA’s Senior Director of Commercial/Multifamily Research. “Originations for commercial mortgage-backed securities (CMBS) fell 28 percent from the same quarter last year, and two-thirds from the second quarter of 2007. Originations for life companies, the government-sponsored enterprises (Fannie Mae and Freddie Mac) and commercial banks all increased between the second and third quarters, leading to an overall decline of just 4 percent between the third quarters of 2006 and 2007.”

“In addition to the impact of the credit crunch, it’s also important to remember that previous periods included large volumes of originations spawned by large portfolio sales (and re-sales) and the privatizations of numerous REITs. These transactions fueled higher origination volumes in previous periods and augment the differences between those periods and the current one.”

THIRD QUARTER 2007 FOUR PERCENT LOWER THAN THIRD QUARTER 2006

The decrease in commercial/multifamily lending activity during the third quarter was driven by decreases in originations for most property types. When compared to the third quarter of 2006, the overall decrease included a 31 percent decrease in loans for office properties, a 20 percent decrease in loans for retail properties, an 18 percent decrease in loans for hotel properties, an 8 percent decrease in loans for industrial properties, as well as a 149 percent increase in loans for health care properties and a 14 percent increase in loans for multifamily properties.
 
Among investor types, conduits for CMBS saw a decrease of 28 percent compared to last year’s third quarter. There was also an 18 percent decrease in loans for commercial bank portfolios, as well as an 11 percent increase in loans for life insurance companies. The dollar volume of loans for Government Sponsored Enterprises (or GSEs – Fannie Mae and Freddie Mac) saw an increase of 61 percent.
 
THIRD QUARTER 2007 30 PERCENT LOWER THAN SECOND QUARTER 2007

Third quarter 2007 mortgage bankers originations were 30 percent lower than originations in the second quarter of 2007.  

Among investor types, conduits for CMBS saw a decline in loan volume of 66 percent compared to the second quarter of 2007, loans for the GSEs saw a 61 percent increase from second quarter to third quarter 2007 while loans for life insurance companies increased 27 percent, and loans for commercial banks increased 9 percent.

Compared to the second quarter, third quarter originations decreased in all property types except health care. The decline included a 72 percent decrease in loans for hotel properties, a 43 percent decrease for retail properties, a 37 percent decrease for office properties, a 13 percent decrease for industrial properties, a 10 percent decrease for multifamily properties, and a 136 percent increase in loans for health care properties.

Detailed statistics on the size and scope of the commercial/multifamily origination market are available from these MBA commercial/multifamily research reports.

• Commercial Real Estate/Multifamily Finance:  Annual Origination Volume Summation, 2006

• Commercial Real Estate/Multifamily Finance Firms: Annual Origination Volumes, 2006

• MBA Annual Report on Multifamily Lending, 2006

These and other reports are available at http://store.mortgagebankers.org or through http://www.mortgagebankers.org.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.