Figures released by the Mortgage Bankers Association (MBA) indicate that commercial and multifamily mortgage market may be coming back to life. 

“The pace of commercial and multifamily mortgage lending continued to increase in the first quarter of this year,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Commercial/multifamily mortgage origination volumes for the first three months of 2011 were the highest of any first quarter since 2002, and were nearly double the volume seen during the first quarter of 2010.”

Mortgage originations were up 89 percent during the first quarter of 2011 compared to the first quarter of last year and were higher than in the first quarter of any year since 2002.  Originations were down 25 percent from the fourth quarter of 2010, but a first quarter fall-off occurred in each of the preceding ten years.  According to MBA, this is a reflection of the industry's push to finalize deals before the end of the year and a resulting drop in first quarter numbers.

That the market still has a long way to go, however, is obvious from the Originations Volume Index.  This index compares the current volume for each type of property compared to the average across quarters for the year 2001 which represents a base of 10. The year-over-year increases held across all property types and the quarter-over-quarter decreases for all but industrial properties. 

The changes from the two earlier periods and the Originations Volume Index are:    

The average loan size increased from that of the first quarter of 2010; in the case of some property types the increase was dramatic.  Loan sizes were down from the 4th quarter in 2010 in all cases again, except for office properties.

Originations increased across all investor types compared to the first quarter of 2010.  Among Originations for CMBS conduits increased 391 percent year-over-year.  Also increasing were originations for life insurance companies (126 percent), commercial bank portfolios (73 percent) and the government sponsored enterprises Freddie Mac and Fannie Mae (59 percent.)  Originations for commercial bank portfolios increased 21 percent compared to Quarter 4 while all others were down. Originations for conduits for CMBS decreased 58 percent; for life insurance companies 15 percent and for the GSEs 45 percent.

There was less consistency across the size of loans originated for the various categories of investors during Quarter One of 2011 compared to the other two quarters.   Some loan sizes declined significantly, some rose, life insurance originations were essentially unchanged.