| Title: | Credit Crunch, Economic Concerns Drive Slower Commercial and Multifamily Lending |
| Source: | MBA |
| Date: | 11/13/2008 |
Contacts:
|
Washington, DC (November 13, 2008) – Commercial and multifamily mortgage loan originations remained low in the third quarter, according to the Mortgage Bankers
Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. Third quarter originations
were fifty-three percent lower than during the same period last year. The year-over-year decrease was seen across all property
types and most investor groups.
“Uncertainty stemming from the credit crunch, and now the deteriorating economy, has led to a continued pull-back among both
lenders and borrowers,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The need among most
investor groups to conserve capital, and the uncertainty of how the slowing economy will affect property fundamentals, is
fueling a prolonged pause in all aspects of commercial real estate activity.”
Decreases in total commercial/multifamily mortgage originations continued to be led by a drop in commercial mortgage-backed
security (CMBS) conduit loans and loans for commercial bank portfolios. These numbers show the impact of the recent credit
crunch and other market disruptions.
THIRD QUARTER 2008 FIFTY-THREE PERCENT LOWER THAN THIRD QUARTER 2007
The decrease in commercial/multifamily lending activity during the third quarter was driven by decreases in originations for
all property types. When compared to the third quarter of 2007, the overall 53 percent decrease included an 87 percent decrease
in loans for hotel properties, a 61 percent decrease in loans for office properties, a 59 percent decrease in loans for health
care properties, a 39 percent decrease in loans for industrial properties, a 30 percent decrease in multifamily property loans,
and a 30 decrease in retail property loans.
Among investor types, conduits for CMBS saw a significant decrease of 93 percent compared to last year’s third quarter. There
was also a 71 percent decrease in loans for commercial bank portfolios, and a 27 percent decrease 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 15 percent.
THIRD QUARTER 2008 11 PERCENT LOWER THAN SECOND QUARTER 2008
Third quarter 2008 mortgage originations were 11 percent lower than originations in the second quarter of 2008.
Among investor types, loans for commercial bank portfolios saw a decrease in loan volume of 55 percent compared to the second
quarter of 2008, loans for conduits for CMBS saw an increase in loan volume of 67 percent compared to the second quarter of
2008, life insurance companies increased by 27 percent during the same time span, and GSEs volume increased 12 percent from
the second quarter 2008 to third quarter 2008. On a quarter-over-quarter basis, the size of the decline in loans for commercial
banks overwhelmed increases among other investor groups.
Compared to the second quarter of 2008, third quarter originations for hotel properties saw a 71 percent decrease. There was
a 42 percent decrease for health care properties, a 28 percent decrease for office properties, a 22 percent increase for industrial
properties, a 9 percent increase for retail properties, and a 9 percent increase for multifamily properties.
To view the report, please visit the following Web link:
http://www.mortgagebankers.org/files/Research/CommercialOriginations/3Q08CMFOriginationsSurvey.pdf
Other 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, 2007
• Commercial Real Estate/Multifamily Finance Firms: Annual Origination Volumes, 2007
• MBA Annual Report on Multifamily Lending, 2007
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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.