US Commercial and Multifamily Mortgage Debt Rising

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The amount of outstanding commercial and multifamily mortgage debt increased by $24.5 billion during the second quarter, rising one percent, as major groups upped their investments. 

The total mortgage debt for commercial and multifamily reached $2.45 trillion during the second quarter, according to data from the Mortgage Bankers Association. Multifamily mortgage debt outstanding rose to $875 billion, an increase of $10.9 billion, or 1.3 percent, from the first quarter 2013.

"A strong appetite among investors to put their money to work in commercial and multifamily mortgages led to an increase in the level of mortgage debt outstanding," Jamie Woodwell, MBA's vice president of commercial real estate research, said in the release.

Banks and thrifts increased their holdings of commercial and multifamily mortgages by $16.4 billion in the second quarter, a two percent increase. Fannie Mae, Freddie Mac and FHA increased their multifamily holdings and guarantees by $5.6 billion; and life insurance companies increased their commercial and multifamily holdings by $4.0 billion, the agency reports.

During the second quarter, bank and thrifts had the largest increase in dollar terms in their commercial/multifamily mortgage debt, increasing by $16.4 billion, or two percent. In percentage terms, REITS had the largest increase in multifamily mortgages, with 31 percent.

Of the entire debt amount, banks continue to hold the largest share, with $855 billion worth of commercial/multifamily mortgages, or 35 percent of the total. Agency and GSE portfolios and MBS hold the largest share of multifamily mortgages, with $388 billion, or 44 percent of the total, the association states.

The association's analysis summarizes the holdings of loans or the form of security if they are securitized. Many life insurance companies, for example, invest in whole loans for which they hold the mortgage note. They also invest in commercial mortgage-backed securities, collateralized debt obligations and other asset backed securities, in which case the security issuers and trustees hold the note.