MBA: Commercial/Multifamily Mortgage Debt Tops $3 Trillion For First Time
Total commercial/multifamily debt outstanding broke the $3 trillion mark for the first time at the end of the first quarter, the Mortgage Bankers Association reported.
The MBA quarterly Commercial/Multifamily Mortgage Debt Outstanding report said total debt outstanding rose to $3.01 trillion at the end of the first quarter. Multifamily mortgage debt outstanding rose to $1.17 trillion, an increase of $23.4 billion, or 2.0 percent, from the fourth quarter.
“Almost two-thirds of the growth came from increases in multifamily mortgage debt outstanding, and 80 percent of that growth came from portfolios and [mortgage-backed securities] and held or guaranteed by federal government agencies and these government-sponsored enterprises,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell.
Looking ahead, Woodwell noted “recent releases from the Federal Reserve show that during the second quarter of 2017, bank multifamily portfolios stopped growing and remain relatively flat, while their holdings of other commercial property loans have continued to grow.”
MBA reported commercial/multifamily mortgage debt outstanding rose by $37.6 billion in the first quarter, a 1.3% increase over the fourth quarter, with three of the four major investor groups increasing their holdings. Those 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; and life insurance companies.
Commercial banks continue to hold the largest share of commercial/multifamily mortgages: $1.2 trillion, or 41 percent of the total. Agency and GSE portfolios and MBS came next, holding $540 billion, or 18 percent. CMBS, CDO and other ABS issues hold $438 billion, or 15 percent; and life insurance companies hold $436 billion, or 15 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, MBA said agency and GSE portfolios and MBS hold the largest share, with $540 billion, or 46 percent of total multifamily debt outstanding. They are followed by banks and thrifts with $390 billion, or 33 percent. State and local government hold $92 billion, or 8 percent; life insurance companies hold $69 billion, or 6 percent; CMBS, CDO and other ABS issues hold $44 billion, or 4 percent; and nonfarm non-corporate business holds $13 billion, or 1 percent.
Changes in Commercial/Multifamily Mortgage Debt Outstanding
MBA reported in the first quarter, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt–$24.6 billion, or 2.1 percent. Agency and GSE portfolios and MBS increased their holdings by $18.9 billion, or 3.6 percent; and life insurance companies increased their holdings by $10.3 billion, or 2.4 percent. CMBS, CDO and other ABS issues saw the largest decrease at $21.3 billion, or 4.6 percent.
In percentage terms, real estate investment trusts saw the largest increase in their holdings of commercial/multifamily mortgages, 8.5 percent. Other insurance companies saw their holdings decrease by 4.8 percent.
Changes in Multifamily Mortgage Debt Outstanding
MBA said the $23.4 billion increase in multifamily mortgage debt outstanding between as of the first quarter represents a 2.0 percent increase from the fourth quarter. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $18.9 billion, or 3.6 percent. Commercial banks increased their holdings by $7.5 billion, or 2.0 percent. Life insurance companies increased by $1.6 billion, or 2.4 percent. CMBS, CDO and other ABS issues saw the largest decline, by $4.1 billion, or 8.6 percent.
In percentage terms, GSE portfolios and MBS recorded the largest increase in holdings of multifamily mortgages, at 3.6 percent. CMBS, CDO and other ABS issues saw the biggest decrease at 8.6 percent.
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 complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded at www.mba.org/documents/research/1Q17MortgageDebtOutstanding.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.
