The level of commercial/multifamily mortgage debt outstanding increased by $28.6 billion in the third quarter of 2014, as the four major investor groups increased their holdings, according to the Mortgage Bankers Association (MBA). That is a 1.1 percent increase over the second quarter of 2014.
Total commercial/multifamily debt outstanding stood at $2.59 trillion in the third quarter. Multifamily mortgage debt outstanding rose to $940 billion, an increase of $16 billion, or 1.7 percent, from the second quarter of 2014.
“The amount of commercial and multifamily mortgage debt outstanding rose to a new record high in the third quarter,” MBA Vice President of Commercial Real Estate Research Jamie Woodwell said. “The quarter-over-quarter increase was the highest since 2008, and the rise in multifamily mortgage debt was the highest since 2007. Strong originations are more than outpacing the low volume of loans maturing this year.”
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 commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset backed securities (ABS) for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues).
Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $944 billion, or 37 percent of the total.
CMBS, CDO and other ABS issues are the second-largest holders of commercial/multifamily mortgages, holding $535 billion, or 21 percent of the total. Agency and GSE portfolios and MBS hold $400 billion, or 15 percent of the total, and life insurance companies hold $351 billion, or 14 percent of the total. 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 $400 billion, or 43 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $289 billion, or 31 percent of the total. State and local government hold $82 billion, or 9 percent of the total; CMBS, CDO and other ABS issues hold $74 billion, or 8 percent of the total; life insurance companies hold $55 billion, or 6 percent of the total, and nonfarm, non-corporate business holds $15 billion, or 2 percent of the total.
Changes in commercial/multifamily mortgage debt oustanding
In the third quarter of 2014, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $13.7 billion, or 1.5 percent. Agency and GSE portfolios and MBS increased their holdings by $7.8 billion, or 2 percent, and life insurance companies increased their holdings by $5.5 billion, or 1.6 percent. REITs saw the largest decrease at $2.1 billion, or down 5.4 percent.
In percentage terms, state and local government retirement funds saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 19 percent. REITs saw their holdings decrease 5 percent.
Changes in multifamily mortgage debt outstanding
The $16 billion increase in multifamily mortgage debt outstanding between the second and third quarter of 2014 represents a 1.7 percent increase. In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt, an increase of $7.8 billion, or 2.8 percent. Agency and GSE portfolios and MBS increased their holdings of multifamily mortgage debt by $7.8 billion, or 2 percent. REITs increased by $1.1 billion, or 58.4 percent. State and local government saw the largest decline in their holdings of multifamily mortgage debt, by $1.7 billion, or down 2 percent.
In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages, at 58 percent. Finance companies saw the biggest decrease, at 4 percent below the second quarter.
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.