MBA: 1st Quarter Commercial/Multifamily Mortgage Debt Outstanding Grows Again
Commercial/multifamily mortgage debt outstanding increased by $35.3 billion in the first quarter, the Mortgage Bankers Association reported, as three of four major investor groups increased their holdings, a 1.2 percent increase over the fourth quarter.
The MBA quarterly Commercial/Multifamily Mortgage Debt Outstanding report said total commercial/multifamily debt outstanding rose to $2.86 trillion at the end of the first quarter. Multifamily mortgage debt outstanding rose to $1.07 trillion, an increase of $18.2 billion, or 1.7 percent, from the fourth quarter.
MBA Vice President of Commercial Real Estate Research Jamie Woodwell said commercial and multifamily mortgage debt outstanding continues to grow at a “strong clip.”
“Bank holdings and multifamily loans backed by Fannie Mae and Freddie Mac drove growth during the quarter,” Woodwell said. “However, the balance of loans held in commercial mortgage-backed securities continues to decline and has now fallen by one third since it peaked in 2007, as more CMBS loans are paid-off and paid down than are originated.”
For the report, MBA classifies the four major investor groups as bank and thrift; commercial mortgage backed securities; collateralized debt obligation and other asset-backed securities issues; federal agency and government-sponsored enterprise portfolios and mortgage-backed securities; and life insurance companies.
The analysis summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under Life Insurance Companies) and in CMBS, CDOs and other ABS for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues).
The report said commercial banks continue to hold the largest share of commercial/multifamily mortgages at $1.1 trillion, or 39 percent of the total. CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $504 billion, or 18 percent. Agency and GSE portfolios and MBS hold $472 billion, or 17 percent; and life insurance companies hold $398 billion, or 14 percent. (Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the “CMBS, CDO and other ABS” category.)
Multifamily Mortgage Debt Outstanding
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $472 billion, or 44 percent, followed by banks and thrifts with $352 billion, or 33 percent. State and local government hold $94 billion, or 9 percent; life insurance companies hold $62 billion, or 6 percent; CMBS, CDO and other ABS issues hold $57 billion, or 5 percent; and nonfarm noncorporate business holds $13 billion, or one percent.
Changes in Commercial/Multifamily Mortgage Debt Outstanding
Banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt in the first quarter, an increase of $26.4 billion, or 2.5 percent. Agency and GSE portfolios and MBS increased their holdings by $11.3 billion, or 2.5 percent, while life insurance companies increased their holdings by $5.0 billion, or 1.3 percent. CMBS, CDO and other ABS issues saw the largest decrease at $11.7 billion, or down 2.3 percent.
In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 8 percent. CMBS, CDO and other ABS issues saw their holdings decrease 2.3 percent.
Changes in Multifamily Mortgage Debt Outstanding
The $18.2 billion increase in multifamily mortgage debt outstanding between the fourth quarter and first quarter represents a 1.7 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $11.3 billion, or 2.5 percent. Commercial banks increased their holdings of multifamily mortgage debt by $8.0 billion, or 2.3 percent. State and local government increased by $2.7 billion, or 2.9 percent. CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt, by $5.7 billion, or 9.2 percent.
In percentage terms, real estate investment trusts recorded the largest increase in holdings of multifamily mortgages, at 6 percent. CMBS, CDO and other ABS issues saw the biggest decrease at 9 percent.
MBA’s complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded at http://www.mba.org/documents/research/1q16mortgagedebtoutstanding.pdf. The MBA analysis is based on data from the Federal Reserve Board’s Financial Accounts of the United States, the Federal Deposit Insurance Corp.’s Quarterly Banking Profile and data from Wells Fargo Securities. More information on this data series is contained in Appendix A.
