Commercial, Multifamily Mortgage Debt in U.S. Hits $3.18 Trillion

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According to Mortgage Bankers Association's latest Commercial & Multifamily Mortgage Debt Outstanding Report released this week, the level of commercial and multifamily mortgage debt outstanding in the U.S. at the end of 2017 was $3.18 trillion, $200.3 billion higher than at the end of 2016, or an increase of 6.7 percent.

The fourth quarter of 2017 saw an increase of $73.6 billion, or 2.4 percent, over the third quarter, as all four of the major investor groups increased their holdings.

Multifamily mortgage debt outstanding rose to $1.26 trillion, an increase of $41.6 billion, or 3.4 percent, from the third of quarter of 2017.

"Commercial and multifamily mortgage debt outstanding continued to grow in 2017, albeit at a slightly slower rate than overall property values," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Even so, 2017 marked the strongest year for mortgage debt growth since 2007, with Fannie Mae, Freddie Mac and FHA leading the market, followed by banks, life companies and real estate investment trusts. The commercial mortgage-backed securities (CMBS) market, which saw a decline for the year as a whole, turned a corner and added $9 billion during the fourth quarter."

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 $606 billion, or 19 percent of the total. Life insurance companies hold $468 billion, or 15 percent of the total, and CMBS, CDO and other ABS issues hold $441 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 $606 billion, or 48 percent of the total multifamily debt outstanding. They are followed by commercial banks with $404 billion, or 32 percent of the total. State and local government hold $94 billion, or 8 percent of the total; life insurance companies hold $73 billion, or 6 percent of the total; CMBS, CDO and other ABS issues hold $43 billion, or 3 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 fourth 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 $33.0 billion, or 5.8 percent. Life insurance companies increased their holdings by $13.6 billion, or 3.0 percent, and commercial banks increased their holdings by $12.4 billion, or 1.0 percent. Finance companies saw the largest decrease at $268 million, or down 0.9 percent.

In percentage terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 5.8 percent. Finance companies saw their holdings decrease 0.9 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $41.6 billion increase in multifamily mortgage debt outstanding between the third and fourth quarters of 2017 represents a 3.4 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 $33.0 billion, or 5.8 percent. Commercial banks increased their holdings of multifamily mortgage debt by $3.7 billion, or 0.9 percent. State and local government increased by $2.0 million, or 2.1 percent. Finance companies saw the largest decline in their holdings of multifamily mortgage debt, by $42 million, or down 0.6 percent.

In percentage terms, agency and GSE portfolios and MBS recorded the largest increase in holdings of multifamily mortgages, at 5.8 percent. Private pension funds saw the biggest decrease at 4.6 percent.

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2017

Between December 2016 and December 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 $85 billion, or 16 percent. CMBS, CDO and other ABS issues decreased their holdings of commercial/multifamily mortgages by $17.9 billion, or 4 percent.

In percentage terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 16 percent. Finance companies saw the largest decrease, at 10 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2017

The $109.5 billion increase in multifamily mortgage debt outstanding during 2017 represents a 9.5 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 $85.1 billion, or 16 percent. CMBS, CDO and other ABS issues saw a decrease of $4.5 billion in their holdings, or 9 percent.

In percentage terms, agency and GSE portfolios and MBS recorded the largest increase in their holdings of multifamily mortgages, 16 percent, while finance companies saw the largest decrease, 27 percent.