Commercial/Multifamily Loans Off in Third Quarter

Washington, DC, November 15, 2007--Commercial and multifamily mortgage bankers' loan originations dipped in the third quarter, according to the Mortgage Bankers Association’s (MBA) quarterly survey.

Decreases in total commercial/multifamily mortgage originations were led by a drop in commercial mortgage-backed security (CMBS) conduit loans and commercial bank loans. These numbers show the impact of the recent credit crunch and other market disruptions.

“The on-going credit crunch slowed the volume of commercial/multifamily mortgage originations in the third quarter,” said Jamie Woodwell, MBA’s senior director.

“Originations for commercial mortgage-backed securities (CMBS) fell 28% 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% 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.”

The decrease in lending activity was driven by decreases in originations for most property types.

When compared to the third quarter of 2006, the overall decrease included a 31% decrease in loans for office properties, a 20% decrease for retail properties, an 18% decrease for hotel properties, an 8% decrease for industrial properties, as well as a 149% increase for health care properties and a 14% increase for multifamily properties.

Third quarter 2007 mortgage bankers originations were 30% lower than originations in the second quarter of 2007.