Commercial and multifamily mortgage bankers’ loan originations in the fourth quarter of 2006 were 3 percent higher than during the same quarter last year, according to the Mortgage Bankers Association. Fourth-quarter loan originations were also up compared to the third quarter of 2006, and year-to-date originations through the fourth quarter of 2006 were higher than at the same time last year.
“Commercial/multifamily mortgage originations ended the year on a very strong note, with the fourth quarter setting a new record for volume,” noted Jamie Woodwell, MBA senior director of Commercial/Multifamily Research. “When the final numbers come in next month, we expect annual originations in 2006 will have surpassed 2005’s record volumes.”
The increase in commercial/multifamily lending activity during the fourth quarter was driven by increases in originations for hotel properties, offices, industrial and multifamily. When compared to the fourth quarter of 2005, the overall increase included a 20 percent increase in loans for hotel properties, an 8 percent increase in loans for office properties, a 3 percent increase in loans for industrial properties, and a 2 percent increase in loans for multifamily. Lending for retail properties saw a 5 percent decrease, and health-care properties saw a decrease of 7 percent.
Among investor types, conduits for commercial mortgage-backed securities (CMBS) and other securitization vehicles saw an increase when compared to the same quarter last year, while other groups saw declines. Mortgage bankers’ originations for conduits increased 32 percent compared to the fourth quarter of 2005. Originations for commercial banks decreased by 7 percent, while originations for life insurance companies decreased 30 percent. Originations for the Government Sponsored Enterprises (or GSEs – Fannie Mae and Freddie Mac) decreased 4 percent when compared to the fourth quarter of 2005.
Mortgage bankers’ originations in Q4 2006 were 27 percent higher than originations in the third quarter of 2006, following the usual pattern of increasing origination volume as the year progresses. Lending on multifamily, office, retail, industrial and health-care properties each increased from the third to the fourth quarter, as hotel and other properties saw declines in quarter-to-quarter origination volumes.
Based on these quarterly figures, it appears 2006 annual originations will exceed the record volumes seen in 2005, according to MBA. Increases are expected in every major property type and across most investor groups. Annual origination volumes will be available from MBA at the end March.