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MBA Says Commercial Mortgage Volume to Increase 11% This Year

FEB 4, 2013 12:11pm ET
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The Mortgage Bankers Association predicts commercial and multifamily real estate loan originations of $254 billion in 2013, up 11% over 2012. The group revealed the data at its annual commercial real estate finance conference in San Diego.

The multifamily segment is supposed to contribute $100 million to the total.

Jumping forward to 2015, the trade group predicts originations of $289 billion for that year.

This represents a slowing of the pace shown through the first three quarters. MBA data for the first nine months of 2012 had originations up 15% on a year-over-year basis.

Meanwhile, the MBA found that commercial and multifamily mortgage originations increased 49% between the third and the fourth quarters of 2012, and were also up 49% compared with 4Q11.

“During the fourth quarter, commercial and multifamily mortgage borrowing and lending hit the highest level since 2007,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “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.”

Separately, Fannie Mae announced it provided nearly $34 billion of multifamily financing last year, the third highest in its history. Approximately 98% of that total was delivered through a commercial mortgage-backed securities execution.

“In 2012 the multifamily market was strong, with solid fundamentals remaining in place,” said Jeffery Hayward, senior vice president, head of the multifamily mortgage business.

“Private capital continued to return to the market, an important step to restoring a more normal lending environment. Having a balanced market with diverse sources of liquidity and credit means the whole market is healthy and everyone is doing their part.”

The top 10 Delegated Underwriting and Servicing program originators last year were Walker & Dunlop, Wells Fargo Multifamily Capital, Beech Street Capital, CBRE Multifamily Capital Inc., Berkeley Point Capital, Berkadia Commercial Mortgage, M&T Realty Capital Corp., Arbor Commercial Funding PNC Real Estate and Greystone Servicing Corp.

Separately, DebtX said prices for impaired performing CMBS loans increased 9.1 percentage points in 2012, while the prices for nonperforming loans increased 11.5 percentage points.

Managing director Will Mercer called last year a strong year in the CRE secondary loan market.

For December, its loan liquidity index fell to 108.2 from 108.4 in November, but was well above the December 2011 level of 94.9.

The estimated price of whole loans securing CMBS fell to 89%, from November’s 89.4%. But on Dec. 31, 2011, loan values were 86.1%.

Impaired performing weighted average loan prices in December were 80.5%, versus 71.3% one year prior, while during the same time frame nonperforming loan prices went to 52.6% from 41.1%.

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