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the latest or ig i nat ion ORIGINATION Q3 Multifamily/ Commercial Originations Up 29% Year-to-date, volumes have climbed 14 percent over 2012's first three quarters. S e c on da r y M a r k e t a na ly t ic s se r v ic i ng O Analysts Predict 32% Drop in Loan Volume for 2014 Recovering purchase loans aren't expected to offset a plunge in refinances. N ext year's mortgage numbers are on track to fall off by nearly a third as the decline in refinances outpaces the slow growth of purchase originations, according to a forecast released by the Mortgage Bankers Association (MBA). MBA says it expects mortgage originations to total $1.2 trillion through 2014, a 32 percent decline from 2013's estimate, which was upwardly revised to $1.7 trillion based on Home Mortgage Disclosure Act (HMDA) data released in September. While purchase loan volume is projected to rise 9 percent to $723 billion next year, MBA 40 | The M Report predicts refinances will plummet 57 percent to $463 billion. Those trends are expected to continue into 2015, with purchase loans totaling $796 billion and refinances falling further to $433 billion—resulting in a slight overall increase in origination volume from 2014 to 2015. "We expect mortgage rates will increase above 5 percent in 2014 and then increase further to 5.3 percent by the end of 2015," said Jay Brinkmann, chief economist and SVP for the association. "As a result, mortgage refinancing will continue to drop, and borrowers seeking to tap the equity in their homes will be more likely to rely on home equity seconds rather than cash-out refinances." While refinance activity may see a slight boost toward the end of 2015 as the Home Affordable Refinance Program (HARP) approaches its expiration date, Brinkmann says many borrowers who have not yet participated in the program are unlikely to do so with interest rates now on the rise. On the topic of overall economic performance, MBA projects GDP growth of 2.4 percent in 2014 and 2.7 percent in 2015, "supported mainly by increases in consumer spending and residential fixed investment," Brinkmann said. Growth is expected to remain slow through the end of 2013 and early 2014 before accelerating in next year's second half as the government works out spending and tax policies linked to the debt ceiling debate. rigination volumes for commercial and multifamily mortgages were largely unchanged in the third quarter compared to the second, but yearly comparisons continue to show growth, the Mortgage Bankers Association (MBA) reported in its quarterly survey. MBA's Origination Volume Index for commercial and multifamily mortgage banks was 166 in Q3, just down from 167 the prior quarter. Against Q3 2012, however, volume was up 29 percent (from an index of 129). Year-to-date, origination volumes increased 14 percent compared to the first three quarters of 2012. "Commercial and multifamily real estate borrowing and lending continued at a moderate clip in the third quarter," said Jamie Woodwell, VP of commercial real estate research for the association. MBA attributes the year-overyear rise to an increase in originations for health care properties, which saw a 124 percent boost over Q3 2012. Office properties saw the second-highest rate of growth at 69 percent, followed by hotel (46 percent), retail (30 percent), industrial (8 percent), and multifamily properties (3 percent). Among investor types, dollar volume of loans originated for conduits for commercial mortgage-backed securities (CMBS) increased by 105 percent from 2012's third quarter. There was a 72 percent increase for life insurance companies and a 41 percent gain for commercial bank portfolio loans, while volume for loans originated for GSE loans dropped by 40 percent. Compared to second-quarter 2013, originations for health care properties rose 161 percent. Volume for most other categories improved modestly: 25 percent for hotels, 21 percent for office properties, and 16 percent for industrial properties.

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