MBA: 2017 Commercial/Multifamily Mortgage Debt Rose by $200 Billion
Commercial/multifamily mortgage debt outstanding at the end of 2017 rose by 6.7 percent to $3.18 trillion, $200.3 billion higher than a year ago, the Mortgage Bankers Association reported.
The MBA Commercial/Multifamily Mortgage Debt Outstanding report said the fourth quarter saw an increase of $73.6 billion, or 2.4 percent, over the third quarter, as all four of the major investor groups increased their holdings. Multifamily mortgage debt outstanding rose to $1.26 trillion, an increase of $41.6 billion, or 3.4 percent, from the third of quarter.
MBA Vice President of Commercial Real Estate Research Jamie Woodwell noted commercial/multifamily mortgage debt outstanding grew at a slightly slower rate than overall property values. “Even so, 2017 marked the strongest year for mortgage debt growth since 2007, with Fannie Mae, Freddie Mac and FHA leading the market, followed by banks, life companies and real estate investment trusts,” he said.
MBA reported commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.3 trillion, or 40 percent of the total, followed by agency and GSE portfolios and mortgage-backed securities, holding $606 billion, or 19 percent. Life insurance companies hold $468 billion, or 15 percent; and commercial mortgage-backed securities, collateralized debt obligations and other asset-backed securities issues hold $441 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.
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 four major investor groups are: bank and thrift; CMBS, CDO and other ABS issues; federal agency and government sponsored enterprise (GSE) portfolios and mortgage backed securities; and life insurance companies.
Multifamily Mortgage Debt Outstanding
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $606 billion, or 48 percent, followed by commercial banks with $404 billion, or 32 percent. State and local government hold $94 billion, or 8 percent; life insurance companies hold $73 billion, or 6 percent; CMBS, CDO and other ABS issues hold $43 billion, or 3 percent ; and nonfarm non-corporate business holds $14 billion, or 1 percent.
Changes in Commercial/Multifamily Mortgage Debt Outstanding
In the fourth quarter, agency and GSE portfolios and MBS saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt, an increase of $33.0 billion, or 5.8 percent. Life insurance companies increased their holdings by $13.6 billion, or 3.0 percent; and commercial banks increased their holdings by $12.4 billion, or 1.0 percent. Finance companies saw the largest decrease at $268 million, down 0.9 percent.
In percentage terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 5.8 percent. Finance companies saw their holdings decrease 0.9 percent.
Changes in Multifamily Mortgage Debt Outstanding
The $41.6 billion increase in multifamily mortgage debt outstanding between the third and fourth quarters represents a 3.4 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 $33.0 billion, or 5.8 percent. Commercial banks increased their holdings of multifamily mortgage debt by $3.7 billion, or 0.9 percent. State and local government increased by $2.0 million, or 2.1 percent. Finance companies saw the largest decline in their holdings of multifamily mortgage debt, by $42 million, down 0.6 percent.
In percentage terms, agency and GSE portfolios and MBS recorded the largest increase in holdings of multifamily mortgages, at 5.8 percent. Private pension funds saw the biggest decrease at 4.6 percent.
Changes in Commercial/Multifamily Mortgage Debt Outstanding During 2017
In 2017, agency and GSE portfolios and MBS saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt, an increase of $85 billion, or 16 percent. CMBS, CDO and other ABS issues decreased their holdings of commercial/multifamily mortgages by $17.9 billion, 4 percent.
In percentage terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 16 percent. Finance companies saw the largest decrease, at 10 percent.
Changes in Multifamily Mortgage Debt Outstanding During 2017
The $109.5 billion increase in multifamily mortgage debt outstanding during 2017 represents a 9.5 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 $85.1 billion, or 16 percent. CMBS, CDO and other ABS issues saw a decrease of $4.5 billion in their holdings, 9 percent.
In percentage terms, agency and GSE portfolios and MBS recorded the largest increase in their holdings of multifamily mortgages, 16 percent, while finance companies saw the largest decrease, 27 percent.
The complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded at www.mba.org/documents/research/4Q17MortgageDebtOutstanding.pdf. MBA’s 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.
