Commercial Real Estate Loans Fall 80 Percent

Washington, DC, Feb. 11, 2009--Commercial and multifamily mortgage loan originations fell 80 percent in the fourth quarter of 2008 when compared to a year earlier, according to the Mortgage Bankers Association.

The year-over-year drop was seen across all property types and investor groups, according to the Washington, D.C.-based association, which represents the real estate finance industry. Originations for the full year were down about 60 percent from 2007 levels.

“Commercial and multifamily mortgage lending slowed to a trickle in the fourth quarter,” said Jamie Woodwell, vice president of commercial real estate research at the association, in a statement. “Between the worsening economy and the continued credit crunch, lenders are extremely cautious about lending and borrowers are likely to hold onto the assets and the loans they already have.”

Drops in total commercial and multifamily mortgage originations were led by a 98 percent fall in commercial mortgage-backed security conduit loans, followed by an 86 percent drop in loans for commercial bank portfolios and 73 percent decrease in loans for life insurance companies.

When compared to the fourth quarter of 2007, the overall 80 percent decrease included the following:

    * 99 percent decrease in loans for hotel properties

    * 82 percent decrease in loans for retail properties

    * 76 percent decrease in loans for industrial properties

    * 72 percent decrease in loans for office properties

    * 62 percent decrease in multifamily property loans

    * 47 percent decrease in health care property loans