U.S. Commercial, Multifamily Mortgage Debt Reaches $40.4 Billion in Q1

---

According to the Mortgage Bankers Association, the level of U.S. commercial and multifamily mortgage debt outstanding increased by $40.4 billion in the first quarter of 2015, as all four major investor groups increased their holdings. That is a 1.5 percent increase over the fourth quarter of 2014.

Total commercial/multifamily debt outstanding stood at $2.68 trillion at the end of the first quarter. Multifamily mortgage debt outstanding rose to $989 billion, an increase of $20.6 billion, or 2.1 percent, from the fourth quarter of 2014.

"Strong first quarter mortgage originations boosted the level of commercial and multifamily mortgage debt outstanding," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Multifamily mortgages continued to grow even more quickly than the market as a whole, with banks increasing their portfolios by $8 billion and agency and GSE portfolios and MBS increasing their holdings by $10 billion."

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, $985 billion, or 37 percent of the total.

CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $534 billion, or 20 percent of the total. Agency and GSE portfolios and MBS hold $422 billion, or 16 percent of the total, and life insurance companies hold $363 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 $422 billion, or 43 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $305 billion, or 31 percent of the total. State and local government hold $92 billion, or 9 percent of the total; CMBS, CDO and other ABS issues hold $71 billion, or seven percent of the total; life insurance companies hold $57 billion, or 6 percent of the total, and federal government holds $13 billion, or one percent of the total.

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the first quarter of 2015, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $18.4 billion, or 1.9 percent. Agency and GSE portfolios and MBS increased their holdings by $10.0 billion, or 2.4 percent, and life insurance companies increased their holdings by $5.2 billion, or 1.4 percent. Private pension funds saw the largest decrease at $728 million, or down 4.0 percent.

In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 5 percent. Private pension funds and nonfinancial corporate business saw their holdings decrease 4 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $20.6 billion increase in multifamily mortgage debt outstanding between the fourth quarter of 2014 and first quarter of 2015 represents a 2.1 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 $10.0 billion, or 2.4 percent. Commercial banks increased their holdings of multifamily mortgage debt by $8.0 billion, or 2.7 percent. State and local government increased by $3.9 billion, or 4.4 percent. CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt, by $2.1 billion, or down 2.8 percent.

In percentage terms, State and local government recorded the largest increase in holdings of multifamily mortgages, at 4 percent. Private pension funds saw the biggest decrease at 4 percent.