MBA: Commercial, Multifamily Originations Trip in Q3

Commercial and multifamily borrowing hit a snag in the year's third quarter, according to ""findings released"":http://www.mortgagebankers.org/files/Research/CommercialOriginations/3Q12CMFOriginationsSurvey.pdf by the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm (MBA).

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Origination volumes for commercial and multifamily mortgages declined 17 percent from Q2 and 7 percent year-over-year, data from MBA's Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations shows.

""Commercial and multifamily mortgage borrowing slowed in the third quarter,"" said Jamie Woodwell, MBA's VP of commercial real estate research. ""Even though low interest rates continue to make borrowing extremely attractive, a moderate pace of commercial property sales transactions and a continued drop in the volume of commercial mortgages maturing limited the overall amount of commercial mortgage loans originated.""

Compared to the second quarter, loan volume dropped for four of the six property categories. There was a 43 percent decrease in third-quarter originations for retail properties, a 29 percent decrease for office properties, a 25 percent decline for health care properties, and a 12 percent drop for hotels.

Multifamily and industrial loans both saw increases from Q2, posting growth of 7 percent and 8 percent, respectively.

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Among investor types, loans for conduits for commercial mortgage-backed securities (CMBS) decreased 55 percent in loan volume, while loan volume for life insurance companies dropped 37 percent. Meanwhile, originations increased 6 percent for commercial bank portfolios and 14 percent for GSEs.

The overall year-over-year decrease was driven largely by drops in originations for retail and office properties. The dollar volume of loans for retail properties fell 35 percent from Q3 2011, while volume for office properties fell 24 percent.

All other property types saw increases in dollar volume of loans: Multifamily loans jumped up 30 percent year-over-year, health care and industrial property loans both increased 19 percent, and hotel property loans slid up 4 percent.

Borrowing interest either rose or stayed flat year-over-year among most investor types. There was an 8 percent increase for commercial bank portfolios and a 30 percent increase for GSEs. There was no change in volume of loans originated for conduits for CMBS. Loans for life insurance companies posted a significant decrease, dropping 32 percent from 2011's third quarter.

Year-to-date, the end of Q3 saw origination up 15 percent compared to the same period in 2011.

All property types saw increased origination activity in 2012's first nine months compared to last year: Originations rose 33 percent for health care properties, 30 percent for multifamily properties, 24 percent for retail, 8 percent for hotels, and 7 percent each for office and industrial properties.

Investors of most types were also more active year-to-date in 2012. Versus the first nine months of 2011, loan volume increased 44 percent for commercial bank portfolios, 39 percent for GSEs, and 7 percent for CMBS conduits. The exception was in loans for life insurance companies, which decreased 6 percent.