Commercial mortgage originations rise significantly in Q4

Commercial mortgage originations rose significantly in 2012.

Commercial property managers likely increased mortgage origination activity during the final three months of 2012, as the figure spiked compared to both the third quarter and the same period in 2011.

There was a total volume increase in originations that neared 50 percent when comparing the fourth quarter with the previous three-month period, according to a report from the Mortgage Bankers Association. This was partly due to the hotel market experiencing an origination jump of nearly 100 percent. The multifamily market’s origination level rose nearly 50 percent, as well. Industrial properties had a strong quarter compared to the previous period, as originations spiked more than 85 percent. Retail, office and healthcare properties also experienced notable jumps.

“During the fourth quarter, commercial and multifamily mortgage borrowing and lending hit the highest level since 2007,” said Jamie Woodwell, vice president of commercial real estate research at MBA. “Low interest rates are prompting borrowers to finance, and improving property markets are helping more deals underwrite successfully. The relative strength of commercial and multifamily mortgages as investments continues to fuel lenders’ appetites.”

Compared to the same quarter one year earlier, there was some significant increases in fourth quarter originations. Hotel properties had an origination gain of more than 300 percent, the report explained. The office sector had a gain of nearly 80 percent, while multifamily properties spiked approximately 50 percent. The only sector to experience a drop in originations was healthcare, as it fell 26 percent year-over-year.

The full-year did not see any declines in mortgage originations in any sector compared to 2011. Hotels saw a gain of more than 60 percent, while retail boomed by nearly 20 percent, the report added. Multifamily originations rose by close to 40 percent and the industrial sector saw a 10 percent improvement.

Further gains may occur in 2013
There may be further improvements on these figures throughout this year, as momentum in the market is picking up. There could be a mortgage origination level that rises as high as $254 billion this year, MBA noted in a separate report. This would be approximately 10 percent higher than the previous year’s total.

The multifamily market could have a significant effect on the total figure, as the report added it could see origination volumes reach $100 billion this year. This could help further push originations, which are expected to be approximately $289 billion in the next two years.

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