|3RD QUARTER COMMERCIAL MORTGAGE ORIGINATIONS AT $18.7 BILLION; IMPACT OF SEPTEMBER 11th ATTACKS ON LENDING SEEN AS LIMITED
BUT CREDIT STANDARDS TIGHTENING
Washington, DC (November 8, 2001) - Mortgage bankers originated $18.7 billion in commercial and multifamily real estate loans during the 3rd quarter of 2001 and expressed optimism that 4th quarter volumes would be even higher despite generally tighter credit standards, according to the latest survey by the Mortgage Bankers Association of America.
The $18.6 billion in loans originated in the 3rd quarter compares with $17.7 billion in the 2nd quarter of 2001 and $14.1 billion in the 3rd quarter of 2000.
When asked if the September 11th attacks had caused a fall off in loan demand, only about one-third of those surveyed reported a reduction in demand, ranging from 10% to 50%, but most of those reported that loan volumes had since rebounded and indications are that volumes for the 4th quarter were approaching or exceeding pre-September 11th levels. Lower interest rates are a key driver of the continued demand for real estate financing.
The commercial mortgage bankers were also asked if the credit standards of different investors had become tighter in the wake of the attacks. Respondents reported that CMBS conduits, pension funds, commercial banks and life companies are tightening standards. The percentages reporting tighter standards were 73%, 71%, 69% and 65% respectively. In contrast, only 46% and 41% saw Freddie Mac and Fannie Mae tightening credit standards.
The numbers are not directly comparable because not all mortgage bankers deal with all investors, and investors such as life companies and conduits deal in many property types, not just multifamily loans like Fannie Mae and Freddie Mac.
Life companies financed the largest share of commercial and multifamily loans originated during the quarter. The life company share was 25.6% of the dollar volume versus 25.1% for CMBS conduits. Because the size of the average loan going into a life company portfolio was a little more than half the size of the average CMBS conduit loan, the life company share in terms of number of loans was 28.0% versus 15.2% for conduits.
Fannie Mae and Freddie Mac had a combined share of 24.0% of the dollar volume of loans, and 30.2% of the number of loans. The Fannie Mae/Freddie Mac share of multifamily loans dropped from a high of 60.7% in the second quarter to 53.7% in the third quarter.
Overall lending for multifamily properties was down slightly from the 2nd quarter, the only property type to show a decline.
|MBA is the national association representing the real estate finance industry. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership prospects through increased affordability; and to extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters excellence and technical know-how among real estate finance professionals through a wide range of educational programs and technical publications. Its membership of approximately 2,800 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mbaa.org.