BOSTON – Just 8% of all credit unions currently offer commercial mortgages, but that percentage is expected to increase to 18% by 2009, according to a new report from Aite Group.
The report, Commercial Mortgage Technologies: Automating a Non-Standardized Process, examines growth trends for banks and credit unions. In 2005, the loans totaled $459.6 billion with apartment complexes, building and offices comprising more than 50% of business. The average loan size was about $12 million and originations are expected to exceed $615 billion by 2008.
Credit unions and community banks are among those migrating to this growing lending area, said Christine Barry, research director at Aite Group and the report's author.
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"Increasingly, credit unions are shifting focus to offer traditional business banking products," Barry said. "The retail side is becoming increasingly competitive and more of them are looking to business banking to generate fee income."
Barry said some of the barriers that have impeded credit unions from having a larger impact are NCUA's 12.25% of assets MBL cap and using systems that handle only retail transactions.
While community banks are starting to invest in the technology and training to offer commercial mortgages, they could "find themselves in trouble" as a result of tougher guidelines and enhanced requirements that may come from regulators over the next year, the report noted.
All property type mortgage originations experienced growth over the previous year, but the greatest growth was achieved in hotel and health care real estate. On the origination side, the largest issuers of commercial mortgages are Wachovia, Wells Fargo, CapMark Financial Group (formerly GMAC Commercial Mortgage), HFF and Key Bank Real Estate Capital. These lenders were responsible for more than $20 billion in commercial mortgage originations in 2005. [email protected]
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