Multifamily Debt Hits $1T as C/MF Mortgage Debt Continues Upward Trend
Commercial and multifamily mortgage debt outstanding increased by $38.5 billion in the second quarter as three of the four major investor groups increased their holdings, the Mortgage Bankers Association reported.
Multifamily mortgage debt outstanding rose to $1.0 trillion, an increase of $23.6 billion, or 2.4 percent, from the first quarter. Total commercial/multifamily debt outstanding stood at $2.72 trillion at the end of the second quarter, a 1.4 percent increase quarter-over-quarter.
“Rising property values are supporting increased levels of commercial and multifamily mortgage debt,” said Jamie Woodwell, MBA’s Vice President for Commercial Real Estate Research. “The total amount of commercial and multifamily mortgage debt outstanding continues to grow at a strong pace, particularly on the multifamily side. For the first time ever, multifamily mortgage debt outstanding now exceeds $1 trillion and is growing at almost 10 percent per year.”
The major investor groups include banks and thrifts; commercial mortgage-backed securities, collateralized debt obligations 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).
Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.0 trillion, or 37 percent of the total. CMBS, CDO and other ABS issues represent the second-largest holders of commercial/multifamily mortgages, holding $529 billion, or 20 percent of the total. Agency and GSE portfolios and MBS hold $437 billion, or 16 percent of the total and life insurance companies hold $372 billion, or 14 percent of the total. 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 $437 billion or 43 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $315 billion, or 31 percent of the total. State and local government hold $87 billion or 9 percent of the total; CMBS, CDO and other ABS issues hold $72 billion or seven percent of the total; life insurance companies hold $58 billion or 6 percent of the total and the federal government holds $13 billion or one percent of the total.
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 second quarter–an increase of $18.5 billion or 1.9 percent. Agency and GSE portfolios and MBS increased their holdings by $14.5 billion or 3.4 percent, and life insurance companies increased their holdings by $8.8 billion or 2.4 percent. Finance companies saw the largest decrease at $6.3 billion, or down 14.3 percent. In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 5 percent. Finance companies saw their holdings decrease 14 percent.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING The $23.6 billion increase in multifamily mortgage debt outstanding between the first and second quarters represents a 2.4 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 $14.5 billion or 3.4 percent. Commercial banks increased their holdings of multifamily mortgage debt by $9.9 billion or 3.2 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 $1.6 billion or down 2.2 percent. In percentage terms, state and local government retirement funds recorded the largest increase in holdings of multifamily mortgages, at 6 percent. Finance companies saw the biggest decrease at 38 percent.
MBA’s complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded here.
MBA’s analysis is based on data from the Federal Reserve Board’s Financial Accounts of the United States, the Federal Deposit Insurance Corporation’s Quarterly Banking Profile and data from Wells Fargo Securities. More information on this data series is contained in Appendix A.
