Commercial and multifamily mortgage loan originations dropped in the fourth quarter of 2008, according to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. Fourth-quarter originations were 80% lower than during the same period last year. The year-over-year decrease was seen across all property types and investor groups.
‘Commercial and multifamily mortgage lending slowed to a trickle in the fourth quarter," says Jamie Woodwell, vice president of Commercial Real Estate Research at the MBA. "Origination levels in the fourth quarter were 80 percent below last year's fourth quarter, and originations for all of 2008 were down approximately 60 percent from 2007 levels. Between the worsening economy and the continued credit crunch, lenders are extremely cautious about lending, and borrowers are likely to hold onto the assets and the loans they already have."
Decreases in total commercial/multifamily mortgage originations continued to be led by a drop in commercial mortgage-backed security (CMBS) conduit loans and loans for commercial bank portfolios. These numbers show the impact of the recent credit crunch and other market disruptions.
The decrease in commercial/multifamily lending activity during the fourth quarter was driven by decreases in originations for all property types. When compared to the fourth quarter of 2007, the overall 80% decrease included a 99% decrease in loans for hotel properties, an 82% decrease in loans for retail properties, a 76% decrease in loans for industrial properties, a 72% decrease in loans for office properties, a 62% decrease in multifamily property loans, and a 47% in healthcare property loans.
Among investor types, conduits for CMBS saw a significant decrease of 98% compared to last year's fourth quarter. There was also an 86% decrease in loans for commercial bank portfolios, a 73% decrease in loans for life insurance companies, and the dollar volume of loans for government-sponsored enterprises saw a decrease of 15%.
Fourth quarter 2008 mortgage originations were 53% lower than originations in the third quarter of 2008.
Among investor types, loans for life insurance companies saw a decrease in loan volume of 73% compared to the third quarter of 2008, loans for conduits for CMBS saw a decrease in loan volume of 60% compared to the third quarter of 2008, commercial banks decreased by 43% during the same time span, and GSEs volume decreased 21% from the third quarter 2008 to fourth quarter 2008.
Compared to the third quarter of 2008, fourth quarter originations for retail properties saw a 75% decrease. There was a 68% decrease for industrial properties, a 66% decrease for hotel properties, a 63% decrease for office properties, a 35% decrease for healthcare properties, and a 33% decrease for multifamily properties.
The report can be viewed in its entirety at the MBA Web site, www.mortgagebankers.org.