Commercial, Multifamily Mortgage Debt in U.S. at $2.6 Trillion

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According to the Mortgage Bankers Association (MBA), total commercial and multifamily debt outstanding in the U.S. stood at $2.64 trillion in the fourth quarter of 2014, an increase of $48.9 billion, or 1.9 percent, over the third quarter of 2014.

Commercial-multifamily debt outstanding increased at the highest rate since the fourth quarter of 2007, as three of the four major investor groups increased their holdings in the fourth quarter. On a year-over-year basis, the amount of mortgage debt outstanding at the end of 2014 was $119.5 billion higher than at the end of 2013, an increase of 4.7 percent.

Multifamily mortgage debt outstanding rose to $964 billion, an increase of $23.7 billion, or 2.5 percent, from the third quarter and $60.0 billion, or 6.6 percent, from the fourth quarter of 2013.

"Led by growth in loans on multifamily properties, banks, the GSEs and life insurance companies all increased their books of business by more than five percent during the year and by more than two percent during the fourth quarter alone," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Rising property values, improving fundamentals and low interest rates all contributed to the growth."

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, with $967 billion, or 37 percent of the total.

CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $533 billion, or 20 percent of the total. Agency and GSE portfolios and MBS hold $412 billion, or 16 percent of the total, and life insurance companies hold $359 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 categories.

MULTIFAMILY MORTGAGE DEBT OUTSTANDING

Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $412 billion, or 43 percent of the total multifamily debt outstanding.  They are followed by banks and thrifts with $297 billion, or 31 percent of the total.  State and local governments hold $84 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 $57 billion, or 6 percent of the total; and the non-farm non-corporate business holds $16 billion, or 2 percent of the total.

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the fourth quarter of 2014, bank and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $23 billion, or 2.5 percent. Agency and GSE portfolios and MBS increased their holdings of commercial/multifamily mortgages by $13 billion, or 3.1 percent. CMBS, CDO and other ABS issues saw the largest decrease of $3 billion or 0.5 percent.  

In percentage terms, REITs recorded the largest increase in holdings of commercial/multifamily mortgages, at 16.5 percent. Private pension funds saw the biggest decrease, at 6.7 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $23.7 billion increase in multifamily mortgage debt outstanding between the third quarter and fourth quarter of 2014 represents a 2.5 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 $12.5 billion, or 3.1 percent.  Bank and thrifts increased their holdings of multifamily mortgage debt by $8.5 billion, or 2.9 percent. Life insurance companies increased by $1.2 billion, or 2.2 percent. Federal government saw the biggest decrease in their holdings of multifamily mortgage debt, by $190 million, or 1.4 percent.

In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages, at 11.2 percent. Private pension funds saw the biggest decrease, at 2.2 percent.

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2014

Between December 2013 and December 2014, commercial banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $70 billion, or 7.8 percent. CMBS, CDO and other ABS issues decreased their holdings of commercial/multifamily mortgages by $6 billion, or 1.1 percent.

In percentage terms, state and local government retirement funds saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 37.4 percent. Nonfinancial corporate business saw the largest decrease, at 3.2 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2014

The $60 billion increase in multifamily mortgage debt outstanding during 2014 represents a 6.6 percent increase.  In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt - an increase of $34.5 billion, or 13.1 percent. CMBS, CDO and other ABS issues saw a decrease of $1.2 billion in their holdings, or 1.6 percent.

In percentage terms, REITs recorded the largest increase in their holdings of multifamily mortgages, 61.2 percent, while private pension funds saw the largest decrease, 10.4 percent.