Commercial/Multifamily Mortgage Debt Outstanding Approaches $3.5 Trillion

MBA NewsLink Staff

June 11, 2019


Commercial/multifamily mortgage debt outstanding rose by 1.3 percent ($45.4 billion) in the first quarter, the Mortgage Bankers Association reported this morning.

The MBA Commercial/Multifamily Mortgage Debt Outstanding quarterly report said total commercial/multifamily debt outstanding rose to $3.46 trillion by the end of March. Multifamily mortgage debt alone increased by $17.9 billion (1.3 percent) to $1.4 trillion from year-end 2018.

"The amount of mortgage debt backed by commercial and multifamily income-producing properties continues to grow at a strong pace, with three of the four major capital sources, banks, life companies and the GSEs/FHA, growing their holdings by more than one percent during the first quarter," said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. "Real estate investment trusts, finance companies and non-financial corporate businesses also showed strong appetites last quarter, with each growing their holdings of commercial/multifamily mortgages by more than $1 billion."

Woodwell said the depth and breadth of growth among investors signal "healthy interest" in the sector.

Commercial banks held the largest share (39 percent) of commercial/multifamily mortgages during early 2019 at $1.4 trillion, followed by Agency and GSE portfolios and mortgage-backed securities (20 percent) at $687 billion. Life insurance companies held $532 billion (15 percent) and CMBS, CDO and other ABS issues held $466 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's "CMBS, CDO and other ABS" category.

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 $687 billion (50 percent), followed by banks and thrifts with $436 billion (32 percent), state and local governments with $84 billion (6 percent), life insurance companies with $84 billion (6 percent) and CMBS, CDO and other ABS issues with $43 billion (3 percent). Nonfarm non-corporate businesses held $16 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--a $14.8 billion or 1.1 percent increase. Agency and GSE portfolios and MBS increased their holdings by $12.3 billion (1.8 percent), agency and life insurance companies increased their holdings by $11.2 billion (2.2 percent) and finance companies increased their holdings by $3.7 billion (13.5 percent).

In percentage terms, finance companies saw the largest increase--13.5 percent--in their holdings of commercial/multifamily mortgages. Conversely, state and local government retirement funds saw their holdings decrease 9.2 percent.

Changes in Multifamily Mortgage Debt Outstanding
The $17.9 billion increase in multifamily mortgage debt outstanding between fourth-quarter 2018 and first-quarter 2019 represented a 1.3 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest gain, $12.3 billion or 1.8 percent, in their holdings of multifamily mortgage debt. Commercial banks increased their holdings by $5.4 billion (1.3 percent) and life insurance companies increased holdings by $1.8 billion (2.2 percent). State and local government saw the largest decline in their holdings of multifamily mortgage debt, down $1.3 billion (1.5 percent).

In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages at 7.9 percent and state and local government retirement funds saw the biggest decrease at 9.2 percent.

The MBA Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded here. 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.

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