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Commercial mortgage debt increases for first time in two years

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Total commercial/multifamily mortgage debt increased for the first time in two years when it hit $2.4 trillion during the second quarter, the Mortgage Bankers Association said Thursday. That amount is up $3.5 billion, or 0.1%, from the first quarter, marking the first time since 2009 new mortgage debt outpaced paying off or paying down existing loans, according to Jamie Woodwell, MBA vice president of commercial real estate research. Multifamily mortgage debt reached $802 billion in the second quarter, up $3.9 billion higher than the year earlier. "Increases in the balance of mortgages held and insured by life insurance companies, Fannie Mae, Freddie Mac and FHA outpaced declines among banks and thrifts and CMBS issues," Woodwell said. The MBA report excludes loans for acquisition, development and construction, as well as loans collateralized by owner-occupied commercial properties. Commercial banks still hold the largest share of commercial/multifamily mortgages with $792 billion, or 33% of the total debt outstanding in the segment. CMBS, CDO and ABS issues rank second with $617 billion of commercial/multifamily mortgages in their control, representing 26% of the total. Agency and GSE portfolios hold 14% of the market with $332 billion. Life insurance firms hold $304 billion, or 13% of the market, according to the huge trade group. When looking just at multifamily mortgage debt, agency, GSE portfolios and MBS still hold the largest share with $332 billion, or 41% of the all multifamily debt outstanding. Banks and thrifts are next with $216 billion, or 27% of the total. Life insurance companies increased their stake the most, boosting investment by $4 billion, or 1.5%, in the second quarter. Life insurance companies continue to invest in both whole mortgages, where they own the note, commercial mortgage-backed securities, collateralized debt obligations and other asset backed securities. Real estate investment trusts on a percentage basis experienced the largest increase in commercial/multifamily mortgage holdings, with their stake growing 8%. Write to Kerri Panchuk.

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