Multifamily and Commercial Loan Originations Plunge 80 Percent

Commercial and multifamily mortgage loan originations were no exception to the falling trend seen in single-family home originations over the past year. Fourth-quarter 2008 originations for commercial and multifamily mortgages were a whopping 80 percent lower than the same period the prior year, according to a quarterly survey released Tuesday by the Mortgage Bankers Association. And that 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,” said Jamie Woodwell, vice president of Commercial Real Estate Research at the Mortgage Bankers Association.  “[O]riginations 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.” The decrease in total commercial and multifamily mortgage originations was led by a drop in commercial mortgage-backed security (CMBS) conduit loans and loans for commercial bank portfolios — a reflection of the credit crunch and other market disruptions, the MBA said. When compared to fourth-quarter 2007, the overall 80 percent decrease included an 82 percent decrease in loans for retail properties, a 76 percent decrease in loans for industrial properties, a 72 percent drop in loans for office properties and a 62 percent decrease in multifamily property loans. In a quarter-over-quarter comparison, fourth-quarter 2008 mortgage originations were 53 percent lower than originations in the third quarter of 2008. Compared to the third quarter of 2008, fourth quarter originations for retail properties saw a 75 percent decrease. There was a 68 percent decrease for industrial properties, a 63 percent decrease for office properties, and a 33 percent decrease for multifamily properties. Write to Kelly Curran at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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