MBA: 2Q Commercial/Multifamily Mortgage Debt Rises to $3.06 Trillion
Total commercial/multifamily mortgage debt outstanding rose to $3.06 trillion at the end of the second quarter, an increase of $48.7 billion, or 1.6%, from the first quarter, the Mortgage Bankers Association reported this morning.
The MBA quarterly Commercial/Multifamily Mortgage Debt Outstanding report said three of the four major investor groups increased their holdings.
Multifamily mortgage debt outstanding rose to $1.2 trillion in the second quarter, an increase of $21.7 billion, or 1.8 percent, over the first quarter.
MBA Vice President of Commercial Real Estate Research Jamie Woodwell noted commercial/multifamily mortgage debt outstanding ticked up during the second quarter, while the balance of loans in commercial mortgage-backed securities continued its decline, with more loans being paid off and down than new loans being originated.
“This may be one of the last quarters of this long-term trend, as the 10-year loans that were made in 2006 and 2007 have now almost all matured, and there are relatively few CMBS maturities during the remainder of 2017 and 2018,” Woodwell said. “CMBS balances declined by more than $20 billion during the first quarter of this year and by $10 billion in the second quarter. Also of note is that for the first time since 2015, the dollar increase in multifamily mortgages was slower than the growth in debt backed by other property types.”
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.
Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.2 trillion, or 41 percent of the total. Agency and GSE portfolios and MBS ranked, holding $553 billion, or 18 percent. Life insurance companies hold $448 billion, or 15 percent; and CMBS, CDO and other ABS issues hold $428 billion, or 14 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.
Multifamily Mortgage Debt Outstanding
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $553 billion, or 46 percent. They are followed by banks and thrifts with $398 billion, or 33 percent. State and local government hold $92 billion, or 8 percent; life insurance companies hold $71 billion, or 6 percent; CMBS, CDO and other ABS issues hold $41 billion, or 3 percent, and nonfarm non-corporate business holds $14 billion, or 1 percent.
Changes in Commercial/Multifamily Mortgage Debt Outstanding
In the second quarter, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt–an increase of $24.7 billion, or 2.0 percent. Agency and GSE portfolios and MBS increased their holdings by $13.4 billion, or 2.5 percent; and life insurance companies increased their holdings by $12.7 billion, or 2.9 percent. CMBS, CDO and other ABS issues saw the largest decrease at $10.4 billion, down 2.4 percent.
In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 10.4 percent. State and local government retirement funds saw their holdings decrease 4.2 percent.
Changes in Multifamily Mortgage Debt Outstanding
The $21.7 billion increase in multifamily mortgage debt outstanding between the first and second quarters represents a 1.8 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $13.4 billion, or 2.5 percent. Commercial banks increased their holdings of multifamily mortgage debt by $8.1 billion, or 2.1 percent. Life insurance companies increased by $2.0 billion, or 2.9 percent. CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt, by $2.5 billion, or down 5.7 percent.
In percentage terms, nonfinancial corporate business recorded the largest increase in holdings of multifamily mortgages, at 9.5 percent. CMBS, CDO and other ABS issues saw the biggest decrease at 5.7 percent.
The 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).
MBA’s complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded at . 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.
