The recent credit crunch and other market disruptions led to a drop in commercial and multifamily loan originations in the third quarter, the Mortgage Bankers Association announced today in a quarterly survey.
Total third-quarter commercial/multifamily mortgage originations fell 4 percent from the same quarter in 2006, led by a drop in commercial mortgage-backed security (CMBS) conduit loans and commercial bank loans, MBA reported.
“The on-going credit crunch slowed the volume of commercial/multifamily mortgage originations in the third quarter,” said Jamie Woodwell, MBA’s senior director of commercial/multifamily research. “Originations for CMBS fell 28 percent from the same quarter last year, and two-thirds from the second quarter of 2007. Originations for life companies, the government-sponsored enterprises (Fannie Mae and Freddie Mac) and commercial banks all increased between the second and third quarters, leading to an overall decline of just 4 percent between the third quarters of 2006 and 2007.
“In addition to the impact of the credit crunch, it’s also important to remember that previous periods included large volumes of originations spawned by large portfolio sales (and re-sales) and the privatizations of numerous REITs. These transactions fueled higher origination volumes in previous periods and augment the differences between those periods and the current one.”
THIRD-QUARTER 2007 4 PERCENT LOWER THAN THIRD-QUARTER 2006
The decrease in commercial/multifamily lending activity during the third quarter was driven by decreases in originations for most property types. When compared to the third quarter of 2006, the overall decrease included a 31 percent decrease in loans for office properties, a 20 percent decrease in loans for retail properties, an 18 percent decrease in loans for hotel properties, an 8 percent decrease in loans for industrial properties, as well as a 149 percent increase in loans for health care properties and a 14 percent increase in loans for multifamily properties.
Among investor types, conduits for CMBS saw a decrease of 28 percent compared to last year’s third quarter. There was also an 18 percent decrease in loans for commercial bank portfolios, as well as an 11 percent increase 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 61 percent.
THIRD-QUARTER 2007 30 PERCENT LOWER THAN SECOND-QUARTER 2007
Third-quarter 2007 mortgage bankers originations were 30 percent lower than originations in the second quarter of 2007, according to MBA.
Among investor types, conduits for CMBS saw a decline in loan volume of 66 percent compared to the second quarter of 2007; loans for the GSEs saw a 61 percent increase from second quarter to third quarter 2007; loans for life insurance companies increased 27 percent; and loans for commercial banks increased 9 percent.
Compared to the second quarter, third-quarter originations decreased in all property types except health care. The decline included a 72 percent decrease in loans for hotel properties, a 43 percent decrease for retail properties, a 37 percent decrease for office properties, a 13 percent decrease for industrial properties, a 10 percent decrease for multifamily properties, and a 136 percent increase in loans for health care properties.