Mortgage bankers must be pinching themselves in disbelief these days. The industry posted another record-setting year in 2004. Commercial and multifamily mortgage originations reached $136 billion, up 16% from $117 billion reported in 2003, according to the Mortgage Bankers Association.

The fourth quarter of 2004 also established a record with $42.7 billion in mortgage originations, an increase of about 10%, or $3.8 billion, compared with the fourth quarter of 2003. "With commercial property values strong, interest rates low, the economy growing and real estate markets starting to improve, 2005 looks to produce more of the same," says Doug Duncan, MBA chief economist. Indeed, the 10-year Treasury yield – the benchmark for long-term, fixed-rate financing --was an incredibly low 4.05% at the close of business day Monday.

Here is a breakdown of mortgage originations by sector as reported by MBA:

∑ The office sector recorded the biggest year-over-year increase in loan originations, rising from nearly $26 billion in 2003 to $33.2 billion in 2004, a nearly 28% increase. Office originations comprised one-quarter of all loan production in 2004.

∑ The multifamily market continued to account for the largest percentage of all loan production (37.3%). Total loan originations in the multifamily sector reached $50.4 billion in 2004, up 3.1% from $48.9 billion in 2003.

∑ The retail sector notched nearly $25 billion in mortgage originations in 2004, up 23.4% from $20 billion in 2003. Retail accounted for 18.3% of all originations in 2004.

∑ The industrial segment, which represented 6.8% of all mortgage originations in 2004, posted a strong showing. Total originations in 2003 compared with 2004 jumped from $7.4 billion to $9.2 billion, a 24.1% increase.

∑ The hotel sector accounted for only a small fraction of mortgage originations (2.7%), but volume rose year over year. Hotels notched $3.6 billion in originations during 2004, up 26.2% from $2.86 billion in 2003.

Duncan forecasts that the 10-year Treasury yield will rise to 4.75% by the end of the year. If rates rise at such a gradual pace, expect 2005 to be another banner year for mortgage originations.