Commercial Mortgages Experiencing Growth

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All groups of buyers hurried to take advantage of the recovery of the property market in 2013 and the large investors were no exception to the rule. They increased their borrowing as well due to the favorable terms offered by lenders. This resulted in a large increase in the volume of commercial mortgages.

The total volume of commercial mortgages originated by lenders in 2013 equals $358.5 billion. This marked a 22% increase from 2012. The growth trend is expected to remain even though the pace will most certainly be slower. Investors will face increasing mortgage rates, but the demand for rental properties will remain fairly high. They can expect a steady stream of rental income which has good chances of increasing over the years. As the property market is experiencing further recovery and property prices are climbing further up, investors will earn higher profits.

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The largest investors in the property market in 2013 were the commercial banks and savings associations. They used about 28% of the total commercial mortgage volume. The second major group was formed by the issuers of commercial mortgage-backed securities. They were followed by life insurance companies and pension funds.

The most popular properties among commercial investors in 2013 were the multifamily properties. The loans used for the financing of their purchase account for 38% of the total loan volume. The office buildings came second, but they still hold their steady position as always. Smaller chunks of the total financing volume went for the purchase of retail properties, properties designed for traveler and tourist accommodation, industrial properties and medical facilities.

Out of all commercial mortgages, only 3% were for refinance. The share of refinance is expected to remain small in the coming years. This is due to the fact that there will be fewer maturing loans because of the recent crisis in the property market.

The outlook for both the commercial mortgage market and the commercial property market is positive.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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