ORLANDO -- Commercial and multifamily mortgage bankers originated real estate loans totaling $73.8 billion during 2001, a 19% increase over the $62 billion reported for 2000, according to the Mortgage Bankers Association of America (MBA). The results were unveiled at a press conference Feb. 4 during the MBA's Commercial Real Estate Finance/Multifamily Housing Convention at the Walt Disney World Dolphin Hotel.
Much of the jump was due to lending for multifamily properties, which recorded a 33% increase for the year.
Life companies, CMBS conduits and a combination of Fannie Mae and Freddie Mac provided funding for the loans in almost equal shares. Each accounted for about one quarter of the total. Banks, credit companies and pension funds accounted for most of the rest. The Fannie Mae/Freddie Mac share represents a large increase over the previous year when the two government-sponsored enterprises (GSEs) accounted for 19% of total funding.
Jeanette Rice, who is based in Dallas as principal of research for Lend Lease Real Estate Investments, described 2001 as a phenomenal year for originations and one that will be difficult to repeat. Rice predicts that mortgage production will decline by about 15% to 20% in 2002 but she says 2003 will be bullish.
For the fourth quarter of 2001, MBA member firms reported originating $22.5 billion in loans, up from the previous quarter total of $18.7 billion, but down slightly from the fourth-quarter 2000 total of $22.8 billion.
The fourth quarter traditionally has the highest level of originations for the year. In 2000, originations jumped from $14.3 billion to $22.8 billion between the third and fourth quarters. The smaller change between the third and fourth quarters of 2001 is most likely due to tighter credit standards associated with the recent downturn in the economy, increased office vacancies and problems in the hospitality industry.
The biggest annual increase was for multifamily lending, which registered a 33% increase in 2001. Multifamily loans accounted for 48% of all originations in 2001 compared with 43% in 2000.
The biggest decline was for health care properties, which dropped almost 50% or about $1 billion.
Lending for office building properties dropped by almost $400 million, and as a percent of total originations fell from 28% in 2000 to 23% in 2001. In contrast, lending for retail properties was $1.2 billion higher in 2001 than in 2000.
Consistent with the big increase in multifamily lending was the increase in loans funded by Fannie Mae and Freddie Mac. Loans originated for Fannie Mae increased $4.5 billion in 2001, a 55% increase over 2000. Freddie Mac-funded loans increased $2.9 billion over the previous year, an increase of 86%.
The shares of loans originated for life companies and CMBS conduits remained about the same in 2001 vs. 2000. The life company share dropped slightly from 25% to 24%, while the CMBS conduit share increased from 24% to 25%.
-- Matthew Valley