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MBA: Commercial/Multifamily Mortgage Debt Increased by $51.9 Billion in 2Q
The Mortgage Bankers Association reported commercial/multifamily mortgage debt outstanding rose by $51.9 billion (1.5 percent) in the second quarter.
The MBA 2Q Commercial/Multifamily Mortgage Debt Outstanding report said at the end of the first half of 2019, total commercial/multifamily debt outstanding stood at $3.50 trillion. Multifamily mortgage debt alone increased by $24.4 billion (1.7 percent) to $1.5 trillion from the first quarter.
“Strong borrowing and lending, coupled with relatively low levels of loan maturities, are helping to boost the amount of commercial and multifamily mortgage debt outstanding,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “All four major capital sources increased their holdings during the quarter. With strong demand expected to continue, debt levels are likely to climb even more and end the year at a new high.”
The four major investor groups are banks and thrifts; federal agency and government-sponsored enterprise portfolios and mortgage-backed securities; life insurance companies; and commercial mortgage backed securities, collateralized debt obligation and other asset-backed securities issues.
The report said commercial banks continue to hold the largest share (39 percent) of commercial/multifamily mortgages at $1.4 trillion, followed by Agency and GSE portfolios and MBS (20 percent) at $703 billion. Life insurance companies hold $539 billion (15 percent); and CMBS, CDO and other ABS issues hold $471 billion (13 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 of the report.
MBA’s 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).
Multifamily Mortgage Debt Outstanding
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $703 billion (48 percent), followed by banks and thrifts with $445 billion (31 percent), life insurance companies with $143 billion (10 percent), state and local government with $82 billion (6 percent) and CMBS, CDO and other ABS issues holding $42 billion (3 percent). Nonfarm non-corporate businesses hold $16 billion (1 percent).
Changes in Commercial/Multifamily Mortgage Debt Outstanding
In the second quarter, commercial banks saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt, an increase of $22.4 billion (1.7 percent). Agency and GSE portfolios and MBS increased their holdings by $15.9 billion (2.3 percent), life insurance companies increased their holdings by $7.4 billion (1.4 percent), and CMBS, CDO and other ABS issues increased their holdings by $4.8 billion (1.0 percent).
In percentage terms, state and local government retirement funds saw the largest gain (8.8 percent) in their holdings of commercial/multifamily mortgages. Conversely, the federal government saw their holdings decrease 3.4 percent.
Changes in Multifamily Mortgage Debt Outstanding
The $24.4 billion increase in multifamily mortgage debt outstanding from the first quarter represents a 1.7 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest gain, $15.9 billion (2.3 percent). Commercial banks increased their holdings by $9.0 billion (2.1 percent); and life insurance companies increased by $3.3 billion (2.3 percent). The federal government saw the largest decline in their holdings of multifamily mortgage debt at $3.6 billion (28.4 percent).
In percentage terms, real estate investment trusts recorded the largest increase in holdings of multifamily mortgages, at 13percent; the federal government saw the biggest decrease at 28.4 percent.
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 found in Appendix A. MBA’s complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded at http://www.mba.org/documents/research/2q19mortgagedebtoutstanding.pdf.