This article is from the Australian Property Journal archive
THE on-going credit crunch in United States has seen the volume of commercial and multifamily mortgage bankers' loans fall in the third quarter.
According to the Mortgage Bankers Association’s Quarterly Survey, commercial/multifamily mortgage loans were down in the third quarter and are 4% lower than during the same period last year.
MBA’s senior director of commercial/multifamily research Jamie Woodwell said these numbers show the impact of the recent credit crunch and other market disruptions.
According to MBA, the decrease in commercial/multifamily lending activity during the third quarter was driven by decreases in originations for most property types and investor groups.
When compared to the third quarter of 2006, the overall decrease included a 31% decrease in loans for office properties, a 20% decrease in loans for retail properties, an 18% decrease in loans for hotel properties, an 8% decrease in loans for industrial properties, as well as a 149% increase in loans for health care properties and a 14% increase in loans for multifamily properties.
Overall, the decreases in total commercial/multifamily mortgage originations were led by a drop in commercial mortgage-backed security conduit loans and commercial bank loans.
Among investor types, conduits for CMBS saw a decrease of 28% compared to last year’s third quarter. There was also an 18% decrease in loans for commercial bank portfolios, as well as an 11% increase in loans for life insurance companies. The dollar volume of loans for Government Sponsored Enterprises (or GSEs – Fannie Mae and Freddie Mac) remained the same.
On a third and second quarter comparison, MBA’s survey show third quarter mortgage bankers originations were 30% lower than originations in the second quarter of 2007.
Among investor types, conduits for CMBS saw a decline in loan volume of 66% compared to the second quarter of 2007, while loans for life insurance companies increased 27%, loans for commercial banks increased 9% and loans for the GSEs remained relatively flat from the second quarter to third quarter 2007.
Compared to the second quarter, third quarter originations decreased in all property types except health care. The decline included a 72% decrease in loans for hotel properties, a 43% decrease for retail properties, a 37% decrease for office properties, a 13% decrease for industrial properties, a 10% decrease for multifamily properties, and a 136% increase in loans for health care properties.
Woodwell noted that whilst the credit crunch has had an impact, he said it was also important to remember that previous periods included large volumes of originations spawned by large portfolio sales (and re-sales) and the privatisations of numerous REITs.
“These transactions fueled higher origination volumes in previous periods and augment the differences between those periods and the current one,” he concluded.
Australian Property Journal
