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Live from MBA/CREF 2004: Commercial and Multifamily Originations Set Record in ’03

ORLANDO -- Commercial and multifamily mortgage loan originations set a record during 2003, according to the Mortgage Bankers Association. The $116 billion in loan originations reported for 2003 were up by more than one-third from the $86.4 billion reported in 2002. The announcement was made during the group’s 14th annual Commercial Real Estate Finance/Multifamily Housing Convention & Expo in Orlando.

MBA also reported that loan originations in the fourth quarter were the highest ever recorded in MBA’s quarterly survey. The fourth-quarter total of $37.9 billion was $8.2 billion above the volume recorded during the third quarter of 2003 and $7.9 billion above volume recorded during the fourth quarter of 2002.

“The combination of the strong relative value of real estate as an investment, plentiful capital, continued low interest rates and the quickened pace of the economy’s recovery fueled loan demand,” says Doug Duncan, MBA chief economist and senior vice president of research and business development. “The commercial real estate finance business should remain strong as we enter 2004, given our forecast of continued solid economic growth and moderate increases in credit costs.”

The strong 2003 performance was supported by increased lending for all investor groups and property types. The $29.6 billion increase over 2002 included an $8.9 billion increase in multifamily loans, a $7.5 billion increase in office loans and a $5.4 billion increase in retail property loans. Among investor types, conduits had the largest increase at $10.5 billion, while commercial banks increased by $7 billion, Fannie Mae increased by $3.9 billion and life companies increased by $3.3 billion.

Conduits also purchased the largest share of loans originated in 2003. The $37.3 billion originated for conduits represented more than 32.1% of the year’s total. The life company volume of $23.4 billion was 20.2% of the total. The combined Fannie Mae and Freddie Mac total of $21.2 billion was 18.3% of originations, and the originations for commercial banks was 15.6% of the total.

The largest percentage increase in commercial mortgage lending was for hotel and motel properties, where the $2.8 billion in originations for 2003 represented a 111.7% increase from 2002 volumes that were low in the aftermath of the Sept. 11, 2001, terrorist attacks.

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