The Mortgage Bankers Association (MBA) reports that commercial and multifamily loan originations were down 7 percent in the fourth quarter of 2011 compared to the third quarter but were 13 percent higher than originations in the fourth quarter a year earlier.  The year-over year change was driven by originations for both industrial and multifamily properties which increased 43 percent and 31 percent respectively from Q4 2010.  On the negative side, retail loans were down 8 percent, loans for healthcare properties fell 24 percent, office properties were down 29 percent and hotel originations decreased 44 percent.

Quarter over quarter results were mixed.  There was a 153 percent jump in originations for health care properties; industrial loans were up 51 percent and multifamily properties increased 29 percent.  Originations for healthcare properties fell 52 percent, office properties were down 39 percent, and retail property loans decreased 24 percent.

Looking at lending by investor groups, commercial bank portfolios were up by 122 percent compared to the fourth quarter of 2010 and Freddie Mac and Fannie Mae (the GSEs) increased lending 17 percent.  Life insurance companies and conduits for commercial mortgage backed securities (CMBS) decreased lending by 23 percent and 50 percent respectively.

 On a quarter-over-quarter basis only the GSEs increased their loans, which rose 34 percent to an all time high.  Conduits for CMBS were down 26 percent, life insurance companies decreased lending by 23 percent, and commercial bank portfolios declined by 16 percent.  

"MBA's Commercial/Multifamily Mortgage Bankers Origination Index hit record levels for life insurance companies in the second and third quarters of 2011," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "In the fourth quarter, multifamily originations for Fannie Mae and Freddie Mac hit a new all-time high. While the CMBS market continued to be held back by broader capital markets uncertainty during the past year, others - like the GSEs, life companies and many bank portfolios - increased their appetite for commercial and multifamily loans."

Commercial/Multi-family Originations by Investor Types

*2001 Ave. Quarter = 100

Commercial/Multi-family Originations by Property Types

*2001 Ave. Quarter = 100

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The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey reported that mortgage applications as measured by its Market Composite Index were down 2.9 percent on a seasonally adjusted basis during the week ended January 27 but increased 9.0 percent from the previous week on an unadjusted basis.

The seasonally adjusted Purchase Index was down 1.7 percent while it increased 17.1 percent on an unadjusted basis from the week ended January 20 and was 4.3 percent lower than during the same week in 2011.  The Refinance Index decreased 3.6 percent from the previous week.

All of the four week moving averages were higher for the week.  The seasonally adjusted Market Index rose 4.11 percent, the seasonally adjusted Purchase Index was up 2.48 percent and the Refinance Index increased 4.22 percent.

Applications for refinancing represented 80.0 percent of all applications, down from 81.3 percent the previous week.  Applications for adjustable-rate mortgages (ARMs) had a 5.6 percent market share compared to 5.3 percent a week earlier.

Refinancing applications in December increased in every U.S. state according to MBA and, despite multiple holidays only 12 states had fewer purchase applications than in November.  In Connecticut refinancing applications increased 80.1 percent from November and Maine saw a 30.8 percent increase in applications for home purchase mortgages.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Rates fell for all fixed rate mortgages (FRM) compared to the previous week.  The average contract interest rate for 30-year conforming FRM (balances under $417,500) decreased to 4.09 percent with 0.41 point from 4.11 with 0.47 point. Rates for jumbo mortgages (those with balances over $417,500) decreased from 4.39 percent to 4.33 percent while points increased from 0.40 to 0.41.  This is the lowest rate for the 30-year jumbo mortgages since MBA started tracking them one year ago. 

FHA backed 30-year FRM rates decreased one basis point to 3.96 percent with points increasing to 0.61 from 0.57.  Rates for the 15-year FRM were down from 3.40 percent with 0.40 point to 3.36 percent with 0.41 point.  The effective rate of all of the mortgage products listed above also decreased.

The sole rate increase was for the 5/1 ARM which increased on average to 2.94 percent with 0.39 point from 2.91 percent with 0.41 point.  The effective rate also increased. 

Follow what drives changes in mortgage rate each day with Mortgage Rate Watch from MND.

All rates quoted are for 80 percent loan to value loans and points include the origination fee.

Michael Fratantoni, MBA's Vice President of Research and Economics said of the week's results, "The Federal Reserve surprised the market last week by indicating that short-term rates were likely to stay at their current low-levels until the end of 2014.  Longer-term treasury rates dropped in response, and mortgage rates for the week were down slightly as a result.  Although total application volume dropped on an adjusted basis relative to last week, refinance volume remains high, with survey participants reporting that the expanded Home Affordable Refinance Program (HARP) contributed to roughly 10 percent of their refinance activity."

MBA's weekly survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.

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