U.S. Multifamily, Commercial Debt Hits $1 Trillion in Q2

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According to the Mortgage Bankers Association, the level of commercial-multifamily mortgage debt outstanding in the U.S. increased by $38.5 billion in the second quarter of 2015, as three of the four major investor groups increased their holdings. That is a 1.4 percent increase over the first quarter of 2015.  

Total commercial-multifamily debt outstanding stood at $2.72 trillion at the end of the second quarter. Multifamily mortgage debt outstanding rose to $1.0 trillion, an increase of $23.6 billion, or 2.4 percent, from the first quarter.

"Rising property values are supporting increased levels of commercial and multifamily mortgage debt," said Jamie Woodwell, MBA's Vice President for Commercial Real Estate Research. "The total amount of commercial and multifamily mortgage debt outstanding continues to grow at a strong pace, particularly on the multifamily side. For the first time ever, multifamily mortgage debt outstanding now exceeds $1 trillion and is growing at almost 10 percent per year."

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, $1.0 trillion, or 37 percent of the total.

CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $529 billion, or 20 percent of the total.  Agency and GSE portfolios and MBS hold $437 billion, or 16 percent of the total, and life insurance companies hold $372 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 $437 billion, or 43 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $315 billion, or 31 percent of the total. State and local government hold $87 billion, or 9 percent of the total; CMBS, CDO and other ABS issues hold $72 billion, or seven percent of the total; life insurance companies hold $58 billion, or 6 percent of the total, and federal government holds $13 billion, or one percent of the total.

CHANGES IN COMMERCIAL-MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the second quarter of 2015, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $18.5 billion, or 1.9 percent. Agency and GSE portfolios and MBS increased their holdings by $14.5 billion, or 3.4 percent, and life insurance companies increased their holdings by $8.8 billion, or 2.4 percent. Finance companies saw the largest decrease at $6.3 billion, or down 14.3 percent.

In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 5 percent.  Finance companies saw their holdings decrease 14 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $23.6 billion increase in multifamily mortgage debt outstanding between the first quarter and second quarter of 2015 represents a 2.4 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 $14.5 billion, or 3.4 percent.  Commercial banks increased their holdings of multifamily mortgage debt by $9.9 billion, or 3.2 percent. Life insurance companies increased by $1.3 billion, or 2.2 percent. CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt, by $1.6 billion, or down 2.2 percent.

In percentage terms, State and local government retirement funds recorded the largest increase in holdings of multifamily mortgages, at 6 percent.  Finance companies saw the biggest decrease at 38 percent.