Commercial and multifamily mortgage originations fell a whopping 80 percent in the fourth quarter compared to the same period a year earlier, according to a new report from the Mortgage Bankers Association.
“Commercial and multifamily mortgage lending slowed to a trickle in the fourth quarter,” said Jamie Woodwell, Vice President of Commercial Real Estate Research at the MBA, in a release.
“Origination levels in the fourth quarter were 80 percent below last year’s fourth quarter, and originations for all of 2008 were down approximately 60 percent from 2007 levels.”
The year-over-year decrease was widespread, hitting all property types and investor groups.
There was a staggering 99 percent drop in loans for hotel properties, an 82 percent decrease in loans for retail properties, a 76 percent fall in loans for industrial properties, and a 72 percent decrease in loans for office properties.
Multifamily property loans slid 62 percent and health care property loans were nearly halved (down 47 percent).
By investor group, conduits for commercial MBS dropped 98 percent, loans for commercial bank portfolios slid 86 percent, and loans for life insurance companies fell 73 percent.
Fannie Mae and Freddie Mac saw just a 15 percent decrease in loan dollar volume compared to a year earlier.
“Between the worsening economy and the continued credit crunch, lenders are extremely cautious about lending and borrowers are likely to hold onto the assets and the loans they already have,” Woodwell added.
Yesterday, the MBA warned that $171 billion in commercial and multifamily loans held by non-bank lenders and investors are set to mature this year, a considerable concern if the credit markets remain frozen.