Commercial and multi-family mortgage bankers' loan originations set a new record during the second quarter of 2005, according to the Mortgage Bankers Association (MBA). The $44.4 billion in loan originations reported for the second quarter was 25 percent higher than the second quarter of 2004 and 41 percent higher than the first quarter of 2005. Second quarter originations were also four percent higher than the fourth quarter of 2004, which had previously been the largest single quarter for originations volume.
MBA also reported that year-to-date loan originations were 31 percent higher than they were during the second quarter of last year.
The increase in commercial/multi-family lending activity was across all property types. The $8.9 billion increase over the second quarter of 2004 included a 26 percent increase in loans for office buildings, a 14 percent increase in loans for multi-family properties, a 27 percent increase in loans for retail and a 34 percent increase in loans for industrial space. The largest increase in lending was for hotel properties, which saw a 189 percent increase from the second quarter 2004.
Among investor types, commercial banks and commercial mortgage-backed securities (CMBS) conduits drove the overall increase. Mortgage bankers' originations for conduits increased 91 percent from the second quarter of 2004, originations for commercial banks increased by 83 percent and originations for life insurance companies increased three percent.
Originations decreased for Fannie Mae by 13 percent, for Freddie Mac by 47 percent, for FHA by 34 percent, and for pension funds by 75 percent.
Multi-family was again the dominant property type, representing 35 percent of total second quarter 2005 originations. Office properties were the next most active property group, with 24 percent of the total, followed by retail properties, with 18 percent of the total.
CMBS conduits purchased the largest share of loans originated during the second quarter, 43 percent of the quarter's total. Originations for commercial banks were 23 percent of the total, loans for life insurance companies were 18 percent of the total, and the combined originations for Fannie Mae and Freddie Mac were 11 percent of the total.
The $12.9 billion increase in lending activity between the first and second quarters of 2005 reflects the industry's usual rise in originations as the year progresses. The quarter-over-quarter increase was led by large increases in multi-family, office and retail lending, which grew by 32 percent, 44 percent and 62 percent, respectively. The gains were widespread, with all property types and almost all investor types recording increase.
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