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Commercial Mortgage Originations Rise but Demand Remains Weak

Commercial and multifamily mortgage loan originations during the third quarter jumped 15 percent from the previous quarter and were 32 percent higher than during the same period last year, according to data released by the ""Mortgage Bankers Association"":http://www.mortgagebankers.org (MBA) Thursday.

Origination volumes for ""Fannie Mae"":http://www.fanniemae.com, ""Freddie Mac"":http://www.freddiemac.com, and life insurance companies were relatively strong during the third quarter, MBA notes. Originations for commercial mortgage-backed securities (CMBS) remained very low in absolute terms but picked up considerably on a percentage basis. But commercial mortgage borrowing at banks fell on both a quarter-over-quarter and year-over-year basis.


Jamie Woodwell, MBA's VP of commercial real estate research says that while today's low interest rates make for a very attractive borrowing environment, relatively low levels of loan maturities and a slow, albeit rising, sales market continue to dampen overall demand for commercial mortgages.

According to ""MBA's quarterly survey"":http://www.mortgagebankers.org/files/Research/CommercialOriginations/3Q10CMFOriginationsSurvey.pdf, the 32 percent annual increase in commercial lending activity during the third quarter of this year was driven primarily by originations for industrial space. When compared to the third quarter of 2009, loans for industrial properties were up 129 percent.

Loans for multifamily properties rose 37 percent on an annual basis. Originations for office space increased 36 percent, and new mortgages on retail properties posted a 19 percent gain.

Hotel loans were down 20 percent, while mortgage originations for health care properties dropped 46 percent from a year ago.

Among investor types, loans for conduits for CMBS saw an increase of 940 percent compared to last year's third quarter. Commercial real estate loans originated by life insurance companies jumped 154 percent from a year ago.