Report from CREF

February 19, 2014

The Mortgage Banker Association’s biggest annual gathering known as CREF was recently held in Orlando. The conference was fast-paced and well-attended, reflecting the level of liquidity in the market. After myriad meetings with correspondent and other lenders to discuss future output and changes to their programs, here’s what we were able to glean for this year’s outlook.

We are seeing increased appetites from insurance company, bank, and CMBS lenders thus far this year, with all of our correspondent life company lenders having increased their 2014 allocations. There is a marked surge in demand for quality loans, which is giving rise to more competitive quotes. Lenders are looking to expand their platforms by adopting new programs such as bridge and construction perm products.  Look for this trend to broaden throughout the year as lenders look for ways to secure their permanent business in an increasingly competitive landscape.

The CMBS market has remained fluid. There are currently 37 active conduit lenders in the market, which is twice the amount that occupied the space in 2012. CMBS and smaller loan focused life insurance companies are having to become more open to transactions outside of their typical window in order to get product out. In some cases we have seen CMBS lenders dip below $5,000,000 and traditionally small loan program focused life company lenders seeking loans north of $5,000,000. Many companies expect CMBS originations to top $100 Billion in 2014.

We are seeing the cost of bridge and mezzanine products coming in and the bank segment ramping up activity, signaling a very competitive environment conducive to borrowers. The MBA projects commercial and multi-family mortgage originations to grow to $300 Billion this year across all lending sectors—a 7% increase from already healthy 2013 volumes.

We look forward to seeing you at next year’s CREF!