MBA: Commercial/Multifamily Originations Up 24% in 2012

Commercial and multifamily originations increased 24 percent from 2011 to 2012, according to the ""Mortgage Bankers Association's"":http://www.mortgagebankers.org/default.htm (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

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The report, released Monday, shows commercial/multifamily originations in the fourth quarter of last year saw a 49 percent quarter-over-quarter increase; they were also up 49 percent year-over-year.

According to Jamie Woodwell, MBA's VP of commercial real estate research, commercial/multifamily borrowing and lending hit the highest level since 2007 last quarter.

""Low interest rates are prompting borrowers to finance, and improving property markets are helping more deals underwrite successfully,"" Woodwell said. ""The relative strength of commercial and multifamily mortgages as investments continues to fuel lenders' appetites.""

MBA attributes the 49 percent year-over-year increase to gains in originations for hotel and office properties. The increase included a 331 percent rise in dollar volume of loans for hotel properties, a 78 percent increase for office properties, a 49 percent increase for multifamily properties, a 46 percent increase for industrial properties, a 5 percent increase in retail property loans, and a 26 percent drop in health care loans.

Among investor types, the dollar volume of loans originated for conduits for commercial mortgage-backed securities (CMBS) increased by 228 percent year-over-year in the fourth quarter. Meanwhile, there was a 68 percent increase for commercial bank portfolio loans, a 51 percent increase for GSEs, and an 18 percent increase for loans originated for life insurance companies.

For the entire year, MBA reported a 61 percent increase over 2011 in originations for hotel properties, a 36 percent increase for multifamily properties, a 19 percent increase for retail properties, a 10 percent increase for industrial properties, a 9 percent increase for offices, and a 6 percent increase for health care facilities.

Among investor types, commercial bank portfolios saw an increase in loan originations of 51 percent in 2012, loans for conduits for CMBS increased 45 percent, originations for GSEs increased 43 percent, and loans for life insurance companies were unchanged.

MBA also released its second annual forecast of commercial/multifamily real estate finance markets, projecting a growth in commercial/multifamily mortgages to $254 billion in 2013--an increase of 11 percent over 2012. That growth is expected to continue, with originations rising up to $289 billion in 2015.

Commercial/multifamily mortgage debt outstanding is expected to grow, as well, ending 2013 above $2.4 trillion, more than 2 percent higher than at the end of 2012. By the end of 2015, mortgage debt outstanding is forecast to exceed $2.5 trillion.

""2012 was a strong year for the commercial and multifamily mortgage markets, and 2013 is shaping up to continue the growth,"" Woodwell said. ""Despite a 21 percent decline in the volume of commercial and multifamily mortgages maturing this year, we expect origination volumes and the amount of mortgage debt outstanding will both increase. Our forecast anticipates Fannie Mae, Freddie Mac and FHA, as well as life insurance companies, will all continue to have strong appetites for making loans, and--coupled with growth in originations for CMBS--the total market will continue to expand.""