The Mortgage Bankers Association Thursday released its quarterly commercial and multifamily mortgage loan originations survey for the third quarter of 2004, showing continued growth in mortgage originations. Commercial mortgage bankers originated $34.1 billion, up 15.2 percent ($4.5 billion) from the same quarter in 2003 and up 2.3 percent ($0.8 billion) from the second quarter of 2004.

“Continued demand for commercial mortgages – from both borrowers and lenders – is setting up 2004 to break 2003’s record origination levels” said Doug Duncan, MBA’s chief economist and senior vice president. “And while modestly rising interest rates could take some wind out of the sails, stabilizing market conditions and low delinquency rates will likely keep capital flowing to commercial and multifamily properties.”

Commercial/multifamily mortgage bankers’ originations of office and retail properties increased by $1.5 billion and $1.1 billion, respectively, compared with the third quarter of 2003. Office property originations increased by 20 percent and retail property originations increased by 22 percent compared with the same period last year. Multifamily loan originations increased by 14 percent compared with last year, and originations of industrial property loans increased 4 percent.

Mortgage bankers’ loan originations placed with investors who held them in portfolio, including commercial banks, life insurance companies, Freddie Mac, credit companies and others, increased over the last year. Conversely, originations to commercial mortgage-backed securities (CMBS) conduits, Fannie Mae, FHA – who have traditionally securitized a significant share of their loans – and pension funds showed declines from the third quarter of 2003.

Third-quarter 2004 mortgage bankers’ originations were 2.3 percent ($0.8 billion) higher than originations in the second quarter of 2004. The third quarter marked increases over the second quarter for loans on office, retail, industrial, health care and other property types, and decreases in originations for multifamily and hotels. On the investor side, originations for commercial banks and life insurance companies increased. Originations for CMBS conduits, Fannie Mae, Freddie Mac, FHA, pension funds, and credit companies all decreased from the second to third quarter.

Conduits packaging loans for CMBS purchased the largest share of loans originated by mortgage bankers – $9.4 billion (representing 27.4 percent of the third quarter’s total volume). The conduits’ volume was followed by commercial bank volume of $8.2 billion (24.1 percent of total originations), life insurance company volume of $7.4 billion (21.6 percent) and Fannie Mae/Freddie Mac volume of $5.1 billion (15.2 percent).

The survey shows multifamily remained the leading property type with 38.9 percent of total originations, or $13.3 billion. Mortgage bankers originated $8.8 billion of office property loans (25.9 percent) and $6.1 billion of retail property loans (17.9 percent) in the third quarter of 2004.

The Mortgage Bankers Association is a national association representing the real estate finance industry.


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