U.S. Commercial Mortgage Debt at Record High $2.56 Trillion

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According to the Mortgage Bankers Association (MBA), the level of commercial and multifamily mortgage debt outstanding increased by $11.1 billion in the first quarter of 2014, as three of the four major investor groups increased their holdings.  That is a 0.4 percent increase over the fourth quarter of 2013.   

Total commercial and multifamily debt outstanding stood at $2.56 trillion in the first quarter.  Multifamily mortgage debt outstanding rose to $913 billion, an increase of $8.7 billion, or 1.0 percent, from the fourth quarter of 2013.

"Commercial and multifamily mortgage debt outstanding continued to expand during the first quarter, hitting another new high," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "Banks led the charge, followed by life insurance companies and REITs, while the CMBS market reverted to a net decline in the balance of outstanding mortgages.  Mortgage debt backed by apartment properties continued to grow at a faster pace than other property types, particularly on bank balance sheets."

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, $914 billion, or 36 percent of the total.

CMBS, CDO and other ABS issues are the second largest holders of commercial and multifamily mortgages, holding $554 billion, or 22 percent of the total.  Agency and GSE portfolios and MBS hold $391 billion, or 15 percent of the total, and life insurance companies hold $342 billion, or 13 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 Debt

Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $391 billion, or 43 percent of the total multifamily debt outstanding.  They are followed by banks and thrifts with $272 billion, or 30 percent of the total.  State and local government 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 $54 billion, or 6 percent of the total; and nonfarm noncorporate business holds $15 billion, or 2 percent of the total.

Changes in Commercial Debt Outstanding

In the first quarter of 2014, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $16.5 billion, or 1.8 percent.  Life insurance companies increased their holdings by $2.4 billion or 0.7 percent and REITs increased their holdings by $2.1 billion, or 5.3 percent.  CMBS, CDO and other ABS issues saw the largest decrease at $11.1 billion, or 2.0 percent.   

In percentage terms, REITs saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 5 percent.  State and local government retirement funds sector saw their holdings decrease 9 percent.

Changes in Multifamily Debt Outstanding

The $8.7 billion increase in multifamily mortgage debt outstanding between the fourth quarter of 2013 and first quarter of 2014 represents a 1.0 percent increase.  In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt, an increase of $9.0 billion, or 3.4 percent.  State and local government increased their holdings of multifamily mortgage debt by $695 million, or 0.8 percent.  Life insurance companies increased by $386 million, or 0.7 percent.  CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt, by $1.2 billion, or 1.6 percent.

In percentage terms, commercial banks recorded the largest increase in holdings of multifamily mortgages, at 3 percent.  State and local government saw the biggest decrease, at 9 percent.