The Mortgage Bankers Association today released its quarterly commercial and multifamily mortgage loan originations survey for the first quarter of 2004, showing continued growth in commercial and multifamily mortgage originations in 2004. Commercial mortgage bankers originated $20.9 billion, up by 2.8 percent ($562 million) from the same quarter in 2003.

The survey shows commercial and multifamily originations varied by property type and investor group, with an increase in lending activity not seen across all property and investor types. Originations for office and retail properties increased by $2.2 billion compared with the first quarter of 2003. Office property originations increased by 29 percent, and retail property originations increased by 31 percent compared with the same period last year. In contrast, multifamily loan originations decreased 13 percent compared with last year. Origination levels among investor groups, such as commercial banks, life companies, commercial mortgage-backed securities (CMBS) conduits and pension funds, also increased. However, credit companies, Federal Housing Administration (FHA), Fannie Mae and Freddie Mac all showed drops in origination volume, falling by 45, 30, 25 and 16 percent, respectively.

First-quarter 2004 originations were $17 billion or 45 percent lower than originations in the fourth quarter of 2003, largely reflecting the industry’s usual push to finalize deals before the end of the year, and the traditional and subsequent drop-offs in first-quarter numbers. The quarter-over-quarter decrease was broad-based, and included an $8 billion decrease in multifamily lending and a $3 billion decrease in office lending. These drops were widespread among investor groups, with six of the nine categories decreasing by more than $1 billion between the fourth and first quarters. In percentage terms, originations for multifamily, industrial, health-care and other properties all declined by more than half from the fourth to first quarter. The largest investor drops in percentage terms came from Freddie Mac (-80 percent) and Fannie Mae (-59 percent).

Conduits originating loans for CMBS purchased the largest share of loans originated during the first quarter – $7.1 billion (representing more than one-third of the quarter’s total). The conduits volume was followed by life company volume of $3.9 billion (18.7 percent of total originations), commercial bank volume of $3.7 billion (17.5 percent), originations for other investors of $2.6 billion (12.6 percent) and the combined Fannie Mae and Freddie Mac total of $2.5 billion (11.9 percent). The survey shows multifamily remained the leading property type with 33.9 percent of the total originations, or $7.1 billion. Mortgage bankers originated $5.3 billion of office property loans (25.5 percent) and $4.6 billion of retail property loans (22 percent) in the first quarter of 2004.

“The first-quarter originations figures show the continued impact of a steady supply of capital – and correspondingly low interest rates – to the commercial and multifamily mortgage markets,” said Doug Duncan, MBA’s chief economist and senior vice president. “Going forward, rising interest rates, coupled with high vacancy rates in many property sectors, would typically point to a slowdown in originations. With the economic expansion currently under way, however, it is more likely that these levels will remain relatively stable.

The Mortgage Bankers Association is a Washington, D.C.-based national association representing the real estate finance industry.


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