MBA: 3Q Commercial/Multifamily Mortgage Debt Continues Rise Led By Commercial Banks
Commercial/multifamily mortgage debt outstanding increased by $38.0 billion in the third quarter, as three of the four major investor groups increased their holdings, the Mortgage Bankers Association reported this morning.
The quarterly MBA Commercial/Multifamily Mortgage Debt Outstanding report said total commercial/multifamily debt outstanding stood at $2.76 trillion at the end of the third quarter, a 1.4 percent increase over the second quarter. Multifamily mortgage debt outstanding rose to $1.02 trillion, an increase of $19.3 billion, or 1.9 percent, from the second quarter.
“Commercial and multifamily mortgage debt outstanding continued to climb in the third quarter, driven by increases in the dollar amount of loans held in bank portfolios,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “Banks accounted for 85 percent of the total increase, adding $32 billion to their holdings of commercial real estate loans, the largest amount since the series began in 2007.”
The four major investor groups are: 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 (MBS); 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).
Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.04 trillion, or 38 percent of the total. CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $520 billion, or 19 percent. Agency and GSE portfolios and MBS hold $443 billion, or 16 percent; and life insurance companies hold $380 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 $443 billion, or 43 percent. They are followed by banks and thrifts with $329 billion, or 32 percent. State and local government hold $86 billion, or 8 percent; CMBS, CDO and other ABS issues hold $67 billion, or 7 percent; life insurance companies hold $60 billion, or 6 percent, and nonfarm non-corporate business holds $13 billion, or 1 percent.
Changes in Commercial/Multifamily Mortgage Debt Outstanding
In the third quarter, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt, an increase of $32.1 billion, or 3.2 percent. Life insurance companies increased their holdings by $8.6 billion, or 2.3 percent; and agency and GSE portfolios and MBS increased their holdings by $6.0 billion, or 1.4 percent. CMBS, CDO and other ABS issues saw the largest decrease at $9.0 billion, or 1.7 percent.
In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 6 percent. Finance companies saw their holdings decrease by 7 percent.
Changes in Multifamily Mortgage Debt Outstanding
The $19.3 billion increase in multifamily mortgage debt outstanding between the second quarter and third quarter represents a 1.9 percent increase. In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt, an increase of $13.9 billion, or 4.4 percent. Agency and GSE portfolios and MBS increased their holdings of multifamily mortgage debt by $6.0 billion, or 1.4 percent. Life insurance companies increased by $1.3 billion, or 2.2 percent. CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt, by $2.9 billion, or 4.2 percent.
In percentage terms, real estate investment trusts recorded the largest increase in holdings of multifamily mortgages, at 9 percent. Private pension funds saw the biggest decrease at 17 percent.
MBA’s complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded at www.mba.org/Documents/Research/3Q15MortgageDebtOutstanding.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.
