MBA: Record-High 1Q Commercial/Multifamily Mortgage Debt Outstanding
Commercial/multifamily mortgage debt outstanding increased by $74.2 billion (1.8 percent) to record levels in the first quarter, the Mortgage Bankers Association reported Thursday in its quarterly Commercial/Multifamily Mortgage Debt Outstanding Report.
MBA said total commercial/multifamily mortgage debt outstanding rose to $4.25 trillion at the end of the first quarter. Multifamily mortgage debt alone increased $37.4 billion (2.1 percent) to $1.8 trillion.
“Driven by record-high originations for a first quarter, the amount of commercial and multifamily mortgage debt outstanding climbed to a new high at the end of March,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research. “Depositories and life insurance companies were behind the majority of the growth, and multifamily mortgage debt continued to rise at a solid level.”
Woodwell noted the recent run-up in interest rates and drop in broader equity values “will without a doubt affect commercial and multifamily markets in the coming quarters, but the relatively strong market fundamentals for most property classes should serve as a stabilizing force.”
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 asse- backed securities issues.
Commercial banks continue to hold the largest share (38 percent) of commercial/multifamily mortgages at $1.6 trillion, followed by Agency and GSE portfolios and MBS (21 percent) at $911 billion. Life insurance companies hold $635 billion (15 percent), while CMBS, CDO and other ABS issues hold $612 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 in the first quarter, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $911 billion (49 percent), followed by banks and thrifts with $529 billion (29 percent), life insurance companies with $183 billion (10 percent), state and local government with $106 billion (6 percent), and CMBS, CDO and other ABS issues holding $72 billion (4 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 – an increase of $37.7 billion (2.4 percent). Life insurance companies increased their holdings by $14.9 billion (2.4 percent), agency an GSE portfolios and MBS increased their holdings by $9.5 billion (1.1 percent), while REITs increased their holdings by $9.3 billion (7.3 percent).
In percentage terms, REITs saw the largest increase – 7.3 percent – in their holdings of commercial/multifamily mortgages. Conversely, private pension funds saw their holdings decrease 7.8 percent.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING
The $37.4 billion increase in multifamily mortgage debt outstanding from a year ago represents a quarterly gain of 2.1 percent. In dollar terms, commercial banks saw the largest gain – $16.5 billion (3.2 percent) – in their holdings of multifamily mortgage debt. Agency and GSE portfolios and MBS increased their holdings by $9.5 billion (1.1 percent), and CMBS, CDO and other ABS issues increased by $7.7 billion (12.0 percent).
CMBS, CDO and other ABS issues saw the largest percentage increase in their holdings of multifamily mortgage debt, up 12.0 percent. Private pension funds saw the largest decline in their holdings of multifamily mortgage debt, down 20.1 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 contained in Appendix A.
MBA’s complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded here.