According to the Mortgage Bankers Association’s latest Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, Commercial and multifamily mortgage loan originations dropped by 80 percent in the fourth quarter from the previous year.
“Fourth quarter originations were 80 percent lower than during the same period last year. The year-over-year decrease was seen across all property types and investor groups.”
“Commercial and multifamily mortgage lending slowed to a trickle in the fourth quarter,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “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. 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.”
The MBA also reported that mortgage application activity dropped off by nearly 25 percent last week, and purchase applications fell to their lowest level since 2000. However, at the same time, bank executives told Congress this week that they need to and are going to start lending “despite economic headwinds”, and are lending more because of the government capital they had received.
“We’re lending,” chief executives of major banks plan to tell Congress Wednesday, according to prepared remarks.
“In testimony prepared for the House Committee on Financial Services, bank chieftains including JPMorgan Chase & Co.’s (JPM) Jamie Dimon, Bank of America Corp.’s (BAC) Kenneth Lewis and Citigroup Inc.’s (C) Vikram Pandit vigorously assert that they are lending despite economic headwinds, and are lending more because of the government capital they had received.
“Their testimony will come at a time when anger at Wall Street has soared over its role in triggering the recession, at its receipt of financial bailout money, and at what politicians and the public perceive to be a cavalier attitude toward perks and pay despite losses and public funding. Anger has also been fanned over assertions that the banks have cut back on lending despite receiving money under the Troubled Asset Relief Program, or TARP. The bankers acknowledge the public anger in their remarks, and seek to portray their banks as using TARP investments to blunt the recession’s effects on Main Street.”
Read the full article here (”Bank Executives Will Tell Congress: ‘We’re Lending‘”). More commentary coming later this week.
