U.S. Commercial, Multifamily Mortgage Balances Slightly Uptick in Q1 to Combined $818 Billion in Outstanding Debt

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According to the Mortgage Bankers Association (MBA), the level of commercial/multifamily mortgage debt outstanding increased by $8.1 billion, or 0.3 percent, in the first quarter of 2012, as three of the four major investor groups increased their holdings.

The $2.37 trillion in outstanding commercial/multifamily mortgage debt was $8.1 billion higher than the fourth quarter 2011 figure. Multifamily mortgage debt outstanding rose to $818 billion, an increase of $6.9 billion or 0.8 percent from the fourth quarter of 2011.

"The amount of commercial and multifamily mortgage debt outstanding increased during the first quarter, as lenders put out more in new loans than paid-off or paid down," said Jamie Woodwell, Vice President of Commercial Real Estate Research at the Mortgage Bankers Association.  "Banks; Fannie Mae, Freddie Mac and FHA; and life insurance companies all increased their holdings of commercial and multifamily mortgages, more than offsetting declines among CMBS and other investor groups."

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).

MBA recently improved its reporting of commercial and multifamily mortgage debt outstanding.  The new reporting excludes two categories of loans that had formerly been included - loans for acquisition, development and construction and loans collateralized by owner-occupied commercial properties.  By excluding these loan types, the analysis here more accurately reflects the balance of loans supported by office buildings, retail centers, apartment buildings and other income-producing properties that rely on rents and leases to make their payments.

Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $808 billion, or 34 percent of the total.

CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $575 billion, or 24 percent of the total. Agency/GSE portfolios and MBS hold $352 billion, or 15 percent of the total, and life insurance companies hold $317 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 MORTGAGE DEBT OUTSTANDING

Looking solely at multifamily mortgages, agency/GSE portfolios and MBS hold the largest share, with $352 billion, or 43 percent of the total multifamily debt outstanding.  They are followed by banks and thrifts with $221 billion, or 27 percent of the total.  CMBS, CDO and other ABS issues hold $88 billion, or 11 percent of the total; state and local governments hold $69 billion, or 8 percent of the total; life insurance companies hold $50 billion, or 6 percent of the total; and the federal government holds $14 billion, or 2 percent of the total.

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the first quarter of 2012, bank and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $13.5 billion, or 1.7 percent.  Agency/GSE portfolios and MBS increased their holdings of commercial/multifamily mortgages by $6.8 billion, or 2 percent.  CMBS, CDO and other ABS issues saw the largest decrease of $11.7 billion, or 2 percent.

In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 5.3 percent.  The household sector saw their holdings decrease 11 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $6.9 billion increase in multifamily mortgage debt outstanding between the fourth quarter of 2011 and first quarter of 2012 represents a 0.8 percent increase.  In dollar terms, agency/GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $6.8 billion, or 2 percent.  Commercial banks increased their holdings of multifamily mortgage debt by $2.4 billion, or 1.1 percent.  Life insurance companies increased by $595 million, or 1.2 percent.  CMBS, CDO, and other ABS issues saw the biggest decrease in their holdings of multifamily mortgage debt, by $2.5 billion or 2.7 percent.

In percentage terms, agency and GSE portfolios and MBS recorded the largest increase in holdings of multifamily mortgages, at 2 percent.  Finance companies saw the biggest decrease, at 2.9 percent.

MBA's analysis is based on data from the Federal Reserve Board's Flow of Funds Account of the United States and the Federal Deposit Insurance Corporation's Quarterly Banking Profile. More information on the construction of this data series is contained in Appendix A in the report.