MortgageReal Estate

MBA: Commercial, multifamily mortgage debt just hit an all-time high

Breaks previous record, set earlier this year

Given that commercial and multifamily mortgage originations are expected to hit a record high this year, it probably shouldn’t come as a shock that there’s more outstanding commercial and multifamily mortgage debt than there’s ever been before.

According to newly released data from the Mortgage Bankers Association, outstanding commercial and multifamily mortgage debt climbed to a record high of $3.32 trillion in the third quarter, topping the previous high of $3.27 trillion, which was set in the previous quarter.

Outstanding commercial and multifamily mortgage debt rose by 1.4% during the quarter, with multifamily debt increasing by $26.1 billion (or 2%) to $1.3 trillion.

According to MBA Vice President of Commercial Real Estate Research Jamie Woodwell, each of the four major lender groups (bank and thrift; federal agency and government-sponsored enterprise portfolios and mortgage-backed securities; life insurance companies; and commercial mortgage-backed securities, collateralized debt obligation and other asset-backed securities issues) added to the balance of loans they hold during the third quarter.

“Favorable commercial real estate fundamentals and strong lender demand pulled commercial and multifamily mortgage debt outstanding to a new high,” Woodwell said. “Multifamily mortgage debt continues to lead the pack, accounting for more than half of the total increase, and Fannie Mae, Freddie Mac and FHA remain the key drivers of multifamily mortgage growth.”

MBA’s report showed that commercial banks continue to hold the largest share (40%) of commercial/multifamily mortgages at $1.3 trillion.

Agency and government-sponsored enterprise portfolios and MBS are the second-largest holders of commercial/multifamily mortgages (20%) at $648 billion, while life insurance companies hold $497 billion (15%), and CMBS, CDO and other ABS issues hold $458 billion (14%).

Focusing specifically on multifamily debt, agency and GSE portfolios and MBS have the largest percentage of total multifamily debt outstanding with $648 billion (49%), followed by banks and thrifts with $426 billion (32%), state and local governments with $88 billion (7%), life insurance companies with $78 billion (6%), and CMBS, CDO and other ABS issues holding $43 billion (3%).

The $26.1 billion increase in outstanding multifamily mortgage debt from the second to third quarter equates to a 2% increase. Agency and GSE portfolios and MBS saw the largest gain, rising by $16.7 billion (2.6%).

Commercial banks increased their holdings by $7.1 billion (1.7%); while CMBS, CDO and other ABS issues increased by $2.6 billion (6.4%). On the other hand, state and local government saw the largest decline in their holdings of multifamily mortgage debt, down $2 billion (2.3%).

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