MBA Reports Increases in Commercial Loan Originations

by LJ Miehe on February 3, 2010

Editor’s Note: This is an exciting sign for the commercial real estate industry.  After a 2+ year decline in loan originations this is big news.  This is the looming problem that people are looking at to see if it is going to really put it to the regional banks that have large exposure to this type of commercial paper.  I know a large player in this space and he was elated to hear this news and he has seen a pickup in business so that could be a bight spot.  Lets keep cautiously optimistic.

The Mortgage Bankers Association (MBA) reported on Tuesday that commercial mortgage originations were at a higher level during the last quarter of 2009 than in either the previous quarter or in the 4th quarter of 2008, but multifamily originations continued to lag. The data was part of the MBA’s Quarterly Survey of Commercial/Multifamily Bankers Originations.

Commercial and Multifamily originations in the October-December 2009 period were 12 percent higher than those recorded June through September. Among investor types, loans from commercial banks increased 39 percent and life insurance companies increased originations by 35 percent. Conduits for Commercial Mortgage Backed Securities (CMBS) decreased by 50 percent and those from GSEs dropped 15 percent.

Loans for health care properties were up 58 percent and retail properties 34 percent.  Loans for hotel properties were up 30 percent, industrial properties 19 percent. However multifamily properties saw an increase of only 4 percent and office properties decreased 12 percent.

Average loan sizes also increased from the third to fourth quarter. The average loan size overall increased from $9.9 million to $11.0 million. The average commercial bank loan was $8.2 million compared to $6.4 million and life insurance companies lent $15.6 million compared to $12.4 million. Loan sizes decreased from $18.2 million to $12.4 million for CMBS conduits and from $14.8 to $13.8 million for Fannie Mae and Freddie Mac.

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