Commercial, Multifamily Mortgage Debt in U.S. Rises to $2.56 Trillion

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According to a Mortgage Bankers Association (MBA) report released today, the level of commercial and multifamily mortgage debt outstanding increased by $24.9 billion in the second quarter of 2014, as three of the four major investor groups increased their holdings.  That is a 1.0 percent increase over the first quarter of 2014.   

Total commercial and multifamily debt outstanding stood at $2.56 trillion in the second quarter.  Multifamily mortgage debt outstanding rose to $930 billion, an increase of $13.0 billion, or 1.4 percent, from the first quarter of 2014.

"The balance of commercial and multifamily mortgage credit has continued to grow and reached another new high in the second quarter," said Jamie Woodwell, MBA's Vice President of Research and Economics.  "The balance of mortgage debt extended to multifamily apartment owners grew by 1.4 percent during the quarter and now stands 26 percent above the level seen at the end of 2007, prior to the recession."

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, $930 billion, or 36 percent of the total.

CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $533 billion, or 21 percent of the total.  Agency/GSE portfolios and MBS hold $392 billion, or 15 percent of the total, and life insurance companies hold $346 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 $392 billion, or 42 percent of the total multifamily debt outstanding.  They are followed by banks and thrifts with $282 billion, or 30 percent of the total.  State and local government hold $89 billion, or 10 percent of the total; CMBS, CDO and other ABS issues hold $75 billion, or 8 percent of the total; life insurance companies hold $55 billion, or 6 percent of the total; and nonfarm, noncorporate business holds $15 billion, or 2 percent of the total.

Changes in Commercial and Multifamily Debt Outstanding

In the second quarter of 2014, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $16.3 billion, or 1.8 percent.  Life insurance companies increased their holdings by $4.3 billion, or 1.3 percent, and REITs increased their holdings by $2.3 billion, or 6.3 percent.  CMBS, CDO and other ABS issues saw the largest decrease at $2.3 billion, or down 0.4 percent.   

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

The $13.0 billion increase in multifamily mortgage debt outstanding between the first and second quarter of 2014 represents a 1.4 percent increase.  In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt, an increase of $9.5 billion, or 3.5 percent.  State and local government increased their holdings of multifamily mortgage debt by $1.8 billion, or 2.1 percent.  Agency and GSE portfolios and MBS increased by $972 million, or 0.2 percent.  CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt, by $220 million, or down 0.3 percent.

In percentage terms, state and local government recorded the largest increase in holdings of multifamily mortgages, at 8 percent.  Private pension funds saw the biggest decrease, at 3 percent below the first quarter.

MBA's analysis is based on data from the Federal Reserve Board's Financial Accounts of the United States, the Federal Deposit Insurance Corporation's Quarterly Banking Profile and data from Wells Fargo Securities.