Commercial and multifamily mortgage bankers’ loan originations in the third quarter were 6 percent lower than during the same quarter last year, led by declines in loans for conduits, life insurance companies and credit companies, according to the Mortgage Bankers Association.

Despite the annual slowing, third-quarter loan originations were up compared to the second quarter of 2006, and year-to-date originations through the third quarter of 2006 remain higher than at the same time last year.

“Mortgage bankers’ commercial/multifamily origination activity is down compared to last year’s third quarter, but origination levels remain extremely strong,” said Jamie Woodwell, MBA senior director of commercial/multifamily research. “We continue to see strong capital flows, improving property fundamentals and very strong loan performance.”

The decrease in commercial/multifamily lending activity during the third quarter was across nearly all property types. The decrease over the third quarter of 2005 included a 15 percent decrease in loans for multifamily properties, a 4 percent decrease in loans for office properties, a 3 percent decrease in loans for retail, a 15 percent decrease in loans for industrial space, and a 39 percent decrease for health care properties. Lending for hotel properties saw a 5 percent increase.

Among investor types, commercial banks and the government-sponsored enterprises (GSEs – Fannie Mae and Freddie Mac) saw increases from the same quarter last year, while other groups saw declines. Mortgage bankers’ originations for commercial banks increased 30 percent from the third quarter of 2005 and originations for the GSEs increased by 9 percent. Originations for conduits decreased 26 percent from the same quarter last year; originations for life insurance companies decreased 15 percent and originations for credit companies decreased 58 percent. 

Third-quarter mortgage bankers’ originations were 5 percent higher than originations in the second quarter of 2006, following the usual pattern of increasing origination volume as the year progresses, according to MBA.

Lending on office and hotel properties each increased from the second to the third quarter, by 132 percent and 71 percent, respectively. Multifamily, retail, industrial and health care all saw decreases in quarter-to-quarter origination volumes. Multifamily originations declined by 1 percent from the second to third quarter, retail by 4 percent, industrial by 10 percent, and health care by 36 percent.

In 2005, 27 percent of commercial/multifamily lending was for multifamily properties, 24 percent was for office buildings, 18 percent was for retail, 9 percent was for hotel/motel, 6 percent was for industrial, 2 percent was for health care, and 15 percent was for other property types. In terms of investor groups, 48 percent of 2005 lending was for conduits, 20 percent for commercial banks, 13 percent for life insurance companies, 7 percent for the GSEs, and 12 percent for other investors.

The Mortgage Bankers Association, based in Washington, D.C., is a national association representing the real estate finance industry, an industry that employs more than 500,000 people in virtually every community in the country.

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