GlobeSt.com: What was your CMBS volume for 2003 and how is 2004 shaping up?

Higgins: We did about a $1.8 billion in new fixed-rate originations in 2003. This year it looks like we're going to have about $2.5 billion. So it's up substantially.

GlobeSt.com: What are you tracking for the industry as a whole?

Higgins: The industry as a whole is up already. For the first six months of 2004, US CMBS volume was about $42 billion versus $35 billion for the same time last year. So we're up significantly. A lot has to do with interest rates and the money that's coming in through investors needing new financing. It's boding well for the market.

GlobeSt.com: Many people in the industry were expecting a down 2004. Why the change?

Higgins: We were expecting interest rates to go up higher, causing more people to lock in last year. That happened to a certain extent and there was a lot of that sort of activity, but this year--as it became more certain that interest rates would go up-- borrowers really jumped into fixed-rate financing, and that forms the bulk of our CMBS business.

GlobeSt.com: How's the floating-rate side going?

Higgins: The floating-rate business is still going well, but it's more competitive, and we see a lot of borrowers converting from construction bridge loans into fixed in fear of higher rates.

GlobeSt.com: Are certain pools doing better than others?

Higgins: I'm seeing more large loans being done today, which is also, obviously, a contributing factor to the volume. That sector pretty much closed down after Sept. 11, 2001, but it started to come back last year, and now it's really in full swing again.

GlobeSt.com: So what will interest rates do and how will that impact volume?

Higgins: I would expect that over the next six to 18 months long-term rates will go up. The 10-year, which is about 4.5%, could be up to someplace between 5% and 6%. So it won't go up substantially. That's still not a bad interest rate, but it could slow the volume of refinancing. So I expect next year to be quieter, but not by much; remember that the commercial-mortgage market is locked out from prepayments. There's no benefit like there is in residential, where if rates drop borrowers can take advantage of that. So it should be down a bit.

GlobeSt.com: Of course, you've been wrong before.

Higgins: I was wrong once before, but not this time. Rates will help slow volume down in 2005.