MBA Report: Commercial Loan Originations Inch Upward from Second Quarter of 2009

Washington, D.C.–The Mortgage Bankers Association (MBA) has just released its Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, and the news is good. At least somewhat. Commercial and multifamily mortgage loan originations rose 1 percent from the second quarter of 2009 to the second quarter of 2010, and jumped a whopping 35 percent from the first to the second quarter of this year, but activity in the multifamily market had absolutely nothing at all to do with the annual increase.

The tiny rise in year-over-year commercial/multifamily mortgage loan originations is certainly better than a decline, but the industry will have to wait another three to six months to get a better sense of current changes in the originations market, as the quarter-over quarter figures can be a bit misleading. “There’s a seasonality to the market; we generally see an increase form the first quarter to the second quarter,” Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, tells MHN.

As for the marginal year-over-year increase in originations, it was the commercial sector, office and industrial properties in particular, that accounted for the slight upward movement. In the multifamily sector, from the second quarter of 2009 to the second quarter of 2010, the originations dropped 25 percent. Additionally, the dollar volume of loans for government-sponsored housing mortgage lenders Fannie Mae and Freddie Mac plummeted 55 percent. However, the availability of mortgages–and mortgages with extremely attractive rates–is not the issue.

“We have seen a pullback in Fannie Mae and Freddie Mac loans, but we have also seen some companies, like life insurers, picking up some of the slack,” Woodwell says. “There are a lot of lenders willing to put out mortgage loans, but there is slack demand for new multifamily mortgages. The volume of sales transactions is low, and loan maturities are low, so there are not a lot of factors driving demand for multifamily mortgages right now.”