|
|
| Following a year of record mortgage production, demand for commercial and multifamily loans shows no signs of waning, according to two industry reports.
The Mortgage Bankers Association of America (MBA) reported industry commercial and multifamily mortgage loan volume set quarterly and annual records during 2003. Fourth quarter commercial and multifamily loan originations totaled $37.9 billion — which MBA said was the highest ever recorded in the quarterly Commercial Mortgage Banker Origination Survey. The volume jumped 28% from $29.7 billion reported in the third quarter and was 26% above the total in the fourth quarter 2002. The quarter’s boosted lending activity “largely reflected the industry’s usual push to finalize deals before the end of the year,” said the MBA. The report showed that about 40% of the quarter’s mortgage originations were multifamily, 23% were office, and 15% were retail. Industrial, hotel/motel, healthcare and other loans comprised the rest of the originations. Compared to the third quarter, hotel/motel originations had the largest percentage increase — 94% to $858 million — followed by a 67% jump in healthcare originations, and a 45% rise in industrial, according to the MBA. Once again, conduits for commercial mortgage-backed securities funded the largest amount in the quarter — $10.2 billion, the report said. Life insurance companies funded $7.8 billion, commercial banks $6.4 billion, Fannie Mae $4.6 billion, and Freddie Mac $3.2 billion. FHA accounted for $1.1 billion, while pension funds, credit companies and other investors funded the remaining volume total. In all of 2003, commercial and multifamily loan originations reached a milestone $116.0 billion, up by more than one-third from the $86.4 billion reported in 2002, said the MBA. In the January 2004 Senior Loan Officer Opinion Survey on Bank Lending Practices released by the Federal Reserve Board this week, banking institutions reported the demand for commercial real estate loans strengthened for the first time since 2000. According to the Fed, over 15% of the fifty-six domestic banks surveyed reported that the demand for commercial real estate loans had increased over the past three months, a turnaround from October’s survey, when about 10% reported weaker demand. Meanwhile, 20% of the 21 surveyed foreign banking institutions also experienced stronger demand for these loans, compared with no net change in demand reported in October. Domestic banks indicated that offices secured 30% of the nonfarm, nonresidential commercial loans in their portfolios, retail developments 24%, and industrial properties 15%, according to the Fed. In foreign institutions, offices accounted for 40% of the loans and retail properties 20%, while hotel and resort properties “figured prominently” in the portfolios of their U.S. branches and agencies. About a fifth of the domestic respondents claimed they increased the maximum amounts of commercial loans, while 13% were willing to provide longer maturities on them. The most cited reasons why banks chose to ease up on loans included increased competition from other commercial banks and lenders, and the commercial market’s improved state and outlook, said the Fed. |
