Commercial/Multifamily Mortgage Lending Up 107 Percent from Last Year

Second quarter 2011 commercial and multifamily mortgage loan originations were 107 percent higher than during the same period last year and 52 percent higher than the revised figures for the first quarter of 2011, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

“Commercial/multifamily mortgage borrowing and lending continues to rise from the depths of 2009 and 2010,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Greater stability in property fundamentals and prices, and an improving sales market, are providing greater clarity for borrowers and lenders alike. Property values and interest rates – coupled with job growth, consumer spending, household growth and other macro-economic trends that drive demand for commercial real estate – will be keys to how property owners seek and qualify for mortgage financing going forward.”

Second Quarter 2011 Originations 107 Percent Higher than Second Quarter 2010

The 107 percent overall increase in commercial/multifamily lending activity during the second quarter of 2011 was driven by increases in originations for all property types. When compared to the second quarter of 2010, the increase included a 141 percent increase in loans for health care properties, a 125 percent increase in loans for hotel properties, a 116 percent increase in loans for retail properties, a 114 percent increase in loans for multifamily properties, a 54 percent increase in office property loans, and a 34 percent increase in industrial property loans.

Among investor types, loans for conduits for CMBS saw an increase of 638 percent compared to last year’s second quarter. There was also a 150 percent increase in loans for commercial bank portfolios, an 87 percent increase in loans for life insurance companies, and a 58 percent increase in loans for Government Sponsored Enterprises (or GSEs – Fannie Mae and Freddie Mac).

Second Quarter 2011 Originations 52 Percent Higher than First Quarter 2011

Second quarter 2011 commercial/multifamily mortgage originations were 52 percent higher than revised originations in the first quarter of 2011. Compared to the first quarter, second quarter originations for health care properties saw a 161 percent increase. There was an 87 percent increase for hotel properties, a 73 percent increase for retail properties, a 47 percent increase for multifamily properties, a 31 percent increase for office properties, and a six percent increase for industrial properties.

Among investor types, loans for conduits for CMBS saw an increase in loan volume of 210 percent compared to the first quarter, loans for commercial bank portfolios saw an increase in loan volume of 41 percent compared to the first quarter, originations for life insurance companies increased 37 percent from the first quarter to the second quarter of 2011, and loans for GSEs increased by 20 percent during the same time span.

Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 5.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending July 22, 2011.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4.9 percent compared with the previous week. The Refinance Index decreased 5.5 percent from the previous week. The seasonally adjusted Purchase Index decreased 3.8 percent from one week earlier. The unadjusted Purchase Index decreased 3.4 percent compared with the previous week and was 2.2 percent higher than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is down 0.3 percent. The four week moving average is down 0.5 percent for the seasonally adjusted Purchase Index, while this average is down 0.3 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 69.6 percent of total applications from 70.1 percent the previous week.

The adjustable-rate mortgage (ARM) share of activity increased to 6.1 percent from 5.8 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.57 percent from 4.54 percent, with points increasing to 1.14 from 0.98 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.67 percent from 3.66 percent, with points increasing to 1.08 from 0.97 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.