MBA: 1st Quarter Commercial/Multifamily Mortgage Debt Outstanding Up 1.7%
Commercial/multifamily mortgage debt outstanding rose by $61.0 billion (1.7 percent) in the first quarter, according to the Mortgage Bankers Association’s quarterly Commercial/Multifamily Mortgage Debt Outstanding report.
MBA said total commercial/multifamily debt outstanding rose to $3.72 trillion at the end of the first quarter. Multifamily mortgage debt alone increased by $28.0 billion (1.8 percent) to $1.6 trillion from the fourth quarter.
“The rise in commercial and multifamily mortgage debt in the first three months of the year carried forward the strong level of activity during 2019,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research. “Rising property values, strong incomes and low interest rates supported increased borrowing and lending. With the onset of the COVID-19 pandemic, borrowing and lending has slowed, and some of the tailwinds from earlier this year have reversed.”
Woodwell said the coming months “are likely to see greater differentiation in debt levels, both by capital source and property type, as investors and lenders assess market conditions.”
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 $752 billion. Life insurance companies hold $572 billion (15 percent), while CMBS, CDO and other ABS issues hold $516 billion (14 percent). Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the report in the “CMBS, CDO and other ABS” category.
Multifamily Mortgage Debt Outstanding
Looking solely at multifamily mortgages in the first quarter, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $752 billion (48 percent), followed by banks and thrifts with $469 billion (30 percent), life insurance companies with $165 billion (10 percent), state and local government with $93 billion (6 percent), and CMBS, CDO and other ABS issues holding $52 billion (3 percent). Nonfarm non-corporate businesses hold $19 billion (1 percent).
Changes in Commercial/Multifamily Mortgage Debt Outstanding
In the first quarter, commercial banks saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $24.1 billion, (1.7 percent). CMBS, CDO and other ABS issues increased their holdings by $12.2 billion (2.4 percent), life insurance companies increased their holdings by $8.3 billion (1.5 percent), and agency and GSE portfolios and MBS increased their holdings by $7.4 billion (1.0 percent).
In percentage terms, nonfinancial corporate business saw the largest increase – 13.3 percent – in their holdings of commercial/multifamily mortgages. Conversely, finance companies saw their holdings decrease 0.5 percent.
Changes in Multifamily Mortgage Debt Outstanding
The $28.0 billion increase in multifamily mortgage debt outstanding from the fourth quarter of 2019 represents a 1.8 percent increase. In dollar terms, commercial banks saw the largest gain – $10.1 billion (2.2 percent). Agency and GSE portfolios and MBS increased their holdings by $7.4 billion (1.0 percent), while CMBS, CDO and other ABS issues increased by $6.9 billion (15.2 percent). Federal government saw the largest decline in their holdings of multifamily mortgage debt, down $228 million (2.0 percent).
The MBA analysis summarizes 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).
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.
The MBA Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded at www.mba.org/documents/research/1Q20MortgageDebtOutstanding.pdf.
