SAN DIEGO — A survey of mortgage bankers conducted by the Mortgage Bankers Association of America (MBA) reports that mortgage originations were up over 5% for 2002. "The strong performance of loan originations in the fourth quarter and for 2002 as a whole undoubtedly reflects the effects of low interest rates on both the refinancing incentives and ability of borrowers to carry mortgages on newly acquired and newly built properties," says Doug Duncan, MBA’s senior vice president and chief economist.
However, the economy must pick-up soon or these lending volumes will be difficult to maintain, says Duncan, adding that demand for commercial and multifamily rental space is key.
Of 44 MBA members reporting in the survey, a total of $29.4 billion worth of mortgages were originated during the last quarter of 2002 — up from a total of $24.8 billion in fourth-quarter 2001. Strong gains in funding by life insurance companies were partly responsible for the surge in originations, while CMBS conduits also helped the drive them up. These two sectors alone funded over $16 billion of loan purchases, or 55% of the total.
The MBA survey also found that multifamily lending surged to its highest level of the year in the fourth quarter, topping out at a whopping $14 billion, while lending for hotels and motels was down 22% in the same time period. The weak market fundamentals forced hospitality sector originations down by nearly 40% for all of 2002. The only other property class to experience lower lending volume for the entire year was the office sector, where volume was down nearly 6.5% total.
Commercial mortgage-backed securities (CMBS) conduits funded a spike in commercial/multifamily loans, as reported by survey respondents. Last year, loan purchases totaled $26.7 billion — a 25% increase over 2001, while commercial bank funding of loan originations rose 12%. Life insurance companies also registered above-average gains, up nearly 10% for the year.