MBA: 2Q Commercial/Multifamily Mortgage Debt Outstanding Up 1.5%

Commercial/multifamily mortgage debt outstanding increased by $60.7 billion (1.5 percent) in the second quarter, according to the Mortgage Bankers Association’s latest Commercial/Multifamily Mortgage Debt Outstanding report.

The report said total commercial/multifamily debt outstanding rose to $3.98 trillion at the end of the second quarter. Multifamily mortgage debt alone increased by $23.8 billion (1.4 percent) to $1.7 trillion from the first quarter.

“Strong demand from all the major capital sources led to another increase in the amount of commercial and multifamily mortgage debt outstanding,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research. “In line with the strength of apartment fundamentals and values, there was a solid increase in the amount of multifamily mortgage debt outstanding. Additionally, the increase in mortgage debt on other, non-multifamily commercial properties was the largest since 2007 – a sign of renewed interest in other property types.”

The four largest 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.

Commercial banks continue to hold the largest share (38 percent) of commercial/multifamily mortgages at $1.5 trillion, followed by agency and GSE portfolios and MBS at $871 billion (22 percent). Life insurance companies hold $596 billion (15 percent), and CMBS, CDO and other ABS issues hold $557 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.

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 held the largest share of total multifamily debt outstanding at $871 billion (50 percent) in the second quarter, followed by banks and thrifts at $491 billion (28 percent); life insurance companies with $174 billion (10 percent); state and local government with $106 billion (6 percent); and CMBS, CDO and other ABS issues with $53 billion (3 percent). Nonfarm non-corporate businesses hold $20 billion (1 percent).

Changes in Commercial/Multifamily Mortgage Debt Outstanding

Commercial banks saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt in the second quarter – an increase of $23.4 billion, (1.6 percent). CMBS, CDO, and other ABS issues increased their holdings by $16.7 billion (3.1 percent); agency and GSE portfolios and MBS increased their holdings by $10.2 billion (1.2 percent); and life insurance companies increased their holdings by $8.7 billion (1.5 percent).

In percentage terms, other insurance companies saw the largest increase – 5 percent – in their holdings of commercial/multifamily mortgages. Conversely, private pension funds saw their holdings decrease 5.7 percent.

Changes in Multifamily Mortgage Debt Outstanding

The $23.8 billion increase in multifamily mortgage debt outstanding from the first quarter represents a 1.4 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest gain – $10.2 billion (1.2 percent). Commercial banks increased their holdings by $10.0 billion (2.1 percent), while life insurance companies increased by $2.5 billion (1.5 percent). Real estate investment trusts saw the largest percentage increase in their holdings of multifamily mortgage debt, up $391 million (6.0 percent). Private pension funds saw the largest decline, down $65 million (12.5 percent).

MBA’s complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded here.  

The report’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, Trepp LLC and data from Wells Fargo Securities. More information on this data series is contained in Appendix A.