Life Insurance Companies May Hold up to $120 Billion in Multifamily Loans by 2024

According to a new study released today by the Mortgage Bankers Association, life insurance companies have an appetite to increase their multifamily lending volumes by approximately $10 billion in 2020, compared to 2018 volumes.

In terms of portfolio holdings, surveyed life companies indicated that they have a desire to hold between $50 billion and $120 billion more in loans backed by multifamily properties on their balance sheets over the next five years.

"Life insurance companies report a strong appetite to make multifamily loans," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "The $10 billion in additional multifamily lending they seek would correspond to an over 30 percent increase in their multifamily lending volumes, and account for roughly 3 percent of the total multifamily lending market, based on 2018 figures."

At the request of its members, MBA surveyed life insurance companies about their capacity to make portfolio loans backed by multifamily properties. Life insurance companies are a significant source of mortgage debt for commercial and multifamily property owners, and have been increasingly active in recent years, making $83 billion in commercial and multifamily mortgage loans in 2018 and holding more than $500 billion in such loans on their balance sheets. Last year, life insurance companies closed $28 billion in multifamily mortgages, approximately 10 percent of the total multifamily lending market and 34 percent of total life company commercial real estate lending.

MBA's survey was conducted during August and September of 2019. The survey collected information from 28 life insurance companies that held $289 billion of commercial and multifamily mortgages at the end of 2018, approximately 54 percent of all life company-held commercial/multifamily mortgage debt. Respondents reported closing $15 billion of multifamily mortgages in 2018, approximately 52 percent of the total multifamily lending done by life companies last year.