Commercial and multifamily mortgage originations in the U.S. increased 9% in the first quarter compared to the first quarter of 2012, according to the Mortgage Bankers Association's (MBA) First Quarter Databook.
Despite the growth in originations, the amount of commercial and multifamily mortgage debt outstanding fell by $4.9 billion or 0.2% during the first quarter, according to the report.
The Federal Housing Administration, Fannie Mae and Freddie Mac increased the amount of commercial mortgage debt they guaranteed by $3.7 billion, while banks and thrifts increased their holdings by around $3.1 billion.
But those and other increases were offset by a $4.8 billion decline in commercial mortgage-backed securities balances, a $3.2 billion decline by private pension funds and a $2.1 billion decline in holdings of finance companies, the report finds. Multifamily mortgage debt increased $4.1 billion or 0.5%.
Meanwhile, the U.S. economy, as measured by the real gross domestic product, grew by 1.8% during the first quarter, a significant improvement compared to the 0.4% increase measured in the fourth quarter.
Unemployment continues to improve, with 150,000 jobs added in January; 32,000 jobs added in February, 142,000 jobs added in March, 149,000 jobs added in April, and 175,000 jobs added in May. This helped bring the unemployment rate from 7.9% in January to 7.6% in June.
Federal Reserve Chairman Ben Bernanke announced June 19 that the Fed would start winding down its stimulus program in the fourth quarter providing that economic data, including unemployment, is favorable, Specifically, he indicated that the Fed would likely wait until unemployment reached 7% before deciding whether to taper its bond buying program.
The MBA's report also shows that mortgage delinquency rates improved for both commercial and multifamily mortgage loans in the first quarter.
Jamie Woodwell, vice president of commercial real estate research for the MBA, said the overall 9% increase in originations "masks larger increases in the dollar volume of loans originated for commercial mortgage-backed securities � and a decline in the amount originated for life insurance company portfolios."
Roughly $840 million or 35% of mortgages for commercial/multifamily use are owned by commercial banks, according to the report.
There was also a 0.5% increase in outstanding multifamily mortgage debt, while banks and thrifts comprised approximately 35% of the mortgage debt outstanding in terms of the business sector.
Outstanding multifamily mortgage debt has been on a steady increase since 2007, according to the MBA.
Based on housing starts and home sales, the MBA forecasts that originations will increase 19% in 2013 to $600 billion and another 17% in 2014 to $703 billion.
Refinance originations will decrease 22% in 2013 to $972 billion and 60% in 2014 as rates increase and the mortgage industry shifts to a more purchase-dominated market.
