U.S. Commercial, Multifamily Mortgage Debt Rises to $3.11 Trillion

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CMBS Debt Outstanding Reverses Years-Long Decline

According to the Mortgage bankers Association, the combined level of commercial and multifamily mortgage debt outstanding increased by $45.4 billion, or 1.5%, to $3.11 trillion in the third quarter of 2017 as all four major investor groups, including Commercial Mortgage Backed Securities (CMBS), increased their holdings over the second quarter.

"The third quarter marks a significant turning point for the CMBS market. With only a few exceptions, since 2008, the balance of commercial and multifamily mortgages held in CMBS has declined each quarter.  That years-long trend ended this quarter," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "With the so-called 'wall of maturities' behind us, and a vibrant market for new originations, we are once again seeing more new loans being originated for CMBS than we are seeing in old loans paying off and paying down.  The result is the largest increase in outstanding CMBS mortgages since the end of 2007."

Multifamily mortgage debt outstanding rose to $1.2 trillion, an increase of $24.9 billion, or 2.1 percent, from the second of quarter of 2017.

The four major investor groups are: bank and thrift; commercial mortgage backed securities (CMBS), collateralized debt obligation (CDO) and other asset backed securities (ABS) issues; federal agency and government sponsored enterprise (GSE) portfolios and mortgage backed securities (MBS);  and life insurance companies.

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).

Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.3 trillion, or 40 percent of the total.

Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages, holding $573 billion, or 18 percent of the total.  Life insurance companies hold $454 billion, or 15 percent of the total, and CMBS, CDO and other ABS issues hold $431 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 $573 billion, or 47 percent of the total multifamily debt outstanding.  They are followed by banks and thrifts with $400 billion, or 33 percent of the total.  State and local government hold $93 billion, or 8 percent of the total; life insurance companies hold $71 billion, or 6 percent of the total; CMBS, CDO and other ABS issues hold $42 billion, or 4 percent of the total, and nonfarm noncorporate business holds $14 billion, or one percent of the total.

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the third quarter of 2017, agency and GSE portfolios and MBS saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $19.8 billion, or 3.6 percent.  Banks and thrifts increased their holdings by $9.0 billion, or 0.7 percent, life insurance companies increased their holdings by $6.0 billion, or 1.3 percent, and CMBS, CDO and other ABS issues increased their holdings by $3.6 billion, or 0.8 percent.

In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 5.6 percent.  Finance companies saw their holdings decrease 0.9 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $24.9 billion increase in multifamily mortgage debt outstanding between the second and third quarters of 2017 represents a 2.1 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 $19.8 billion, or 3.6 percent.  Commercial banks increased their holdings of multifamily mortgage debt by $1.7 billion, or 0.4 percent.  State and local government increased by $1.6 billion, or 1.8 percent.  Federal government saw the largest decline in their holdings of multifamily mortgage debt, by $378 million, or down 3.0 percent.

In percentage terms, agency and GSE portfolios and MBS recorded the largest increase in holdings of multifamily mortgages, at 3.6 percent.  Private pension funds saw the biggest decrease at 4.4 percent.