MBA: 4Q Commercial, Multifamily Mortgage Debt Outstanding Up By $324B
Commercial/multifamily mortgage debt outstanding at year-end 2022 rose by $324 billion (7.7 percent) from the previous year, the Mortgage Bankers Association’s latest quarterly Commercial/Multifamily Mortgage Debt Outstanding Report said.
MBA reported total mortgage debt outstanding rose by 1.7 percent ($77.9 billion) in the fourth quarter. Multifamily mortgage debt grew by $35.6 billion (1.8 percent) to $1.96 trillion during the fourth quarter, and by $148.2 billion (8.2 percent) for the entire year.
“Commercial and multifamily mortgage debt outstanding grew at another strong clip in 2022,” said Jamie Woodwell, MBA Head of Commercial Real Estate Research. “The rate of growth was the second largest since 2007–just below 2021’s pace.”
Woodwell noted depositories led the growth among capital sources, increasing their holdings of commercial and multifamily mortgages by 12 percent. “Additionally, growth in multifamily mortgage balances accounted for almost half of the annual increase,” he said.
Commercial banks continue to hold the largest share (39 percent) of commercial/multifamily mortgages at $1.7 trillion. Agency and GSE portfolios and mortgage-backed securities are the second largest holders of commercial/multifamily mortgages, at $953 billion (21 percent of the total). Life insurance companies hold $666 billion (15 percent), while CMBS, CDO and other ABS issues hold $603 billion (13 percent).
MULTIFAMILY MORTGAGE DEBT OUTSTANDING
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total debt outstanding at $953 billion (49 percent of the total), followed by commercial banks with $598 billion (31 percent), life insurance companies with $191 billion (10 percent), state and local governments with $112 billion (6 percent), and CMBS, CDO and other ABS issues with $60 billion (3 percent).
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING
Commercial banks saw the largest rise in dollar terms in their holdings of commercial/multifamily mortgage debt during the fourth quarter, with an increase of $38.5 billion (2.2 percent). Agency and GSE portfolios and MBS increased their holdings by $27.3 billion (2.9 percent), life insurance companies increased their holdings by $10.8 billion (1.6 percent), and REITs increased their holdings by $5.6 billion (3.2 percent). CMBS, CDO and other ABS issues saw the largest decline (1.2 percent) in their holdings by $7.4 billion.
In percentage terms, nonfinancial corporate business saw the largest increase–3.5 percent–in their holdings of commercial/multifamily mortgages.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING
The $35.6 billion rise in multifamily mortgage debt outstanding between the third and fourth quarters of 2022 represented a 1.8 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase, at $27.3 billion (2.9 percent), in their holdings of multifamily mortgage debt. Commercial banks increased their holdings of multifamily mortgage debt by $14.3 billion (2.4 percent), and life insurance companies increased holdings by $2.1 billion (1.1 percent). CMBS, CDO and other ABS issues saw the largest decline (11.9 percent) in their holdings, by $8.1 billion.
In percentage terms, nonfinancial corporate business recorded the largest increase in holdings of multifamily mortgages (3.5 percent), and private pension funds saw the biggest decrease (50.8 percent).
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2022
Between December 2021 and December 2022, commercial banks saw the largest gain in dollar terms in their holdings of commercial/multifamily mortgage debt–an increase of $183 billion (11.7 percent). Agency and GSE portfolios and MBS increased their holdings of commercial/multifamily mortgages by $52.3 billion (5.8 percent).
In percentage terms, REITs saw the largest increase (25.8 percent) in their holdings of commercial/multifamily mortgages.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2022
The $148.2 billion rise in multifamily mortgage debt outstanding during 2022 represents an 8.2 percent increase. In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt at 16.7 percent ($85.8 billion). CMBS, CDO and other ABS issues saw the largest decrease in their holdings, down $4.3 billion (6.7 percent).
The four major investor groups are: bank and thrift; commercial mortgage-backed securities, collateralized debt obligation and other asset-backed securities issues; federal agency and government sponsored enterprise portfolios and mortgage-backed securities; and life insurance companies.
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).
The report’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, Trepp LLC and data from Wells Fargo Securities. More information on this data series is contained in Appendix A of the report.