Commercial Real Estate News
U.S. Commercial Mortgage Debt Outstanding Hits $212 Billion in 2020
Commercial Mortgage Debt Increased 5.8 Percent in Q4
According to the Mortgage Bankers Association's Latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report, U.S. commercial/multifamily mortgage debt outstanding at the end of 2020 was $212 billion (5.8 percent) higher than at the end of 2019.
Total mortgage debt outstanding in the final three months of 2020 rose by 1.5 percent ($58.2 billion) compared to last year's third quarter, with all four major investor groups increasing their holdings. Multifamily mortgage debt grew by $41.8 billion (2.5 percent) to $1.69 trillion during the fourth quarter, and by $127.9 billion (8.2 percent) for the entire year.
"Despite a fall-off in borrowing and lending during 2020, the total amount of commercial and multifamily mortgage debt outstanding increased during the year," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Continuing the trend of previous quarters, growth in multifamily mortgage debt outpaced other property types, with increases in federally-backed mortgages from Fannie Mae, Freddie Mac, and FHA driving that growth. Strong appetites from all the major capital sources should keep growth going in 2021, but with key differences across property types."
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.
MBA's 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 (38 percent) of commercial/multifamily mortgages at $1.5 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages, at $838 billion (22 percent of the total). Life insurance companies hold $580 billion (15 percent), and CMBS, CDO and other ABS issues hold $533 billion (14 percent).
MULTIFAMILY MORTGAGE DEBT OUTSTANDING
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total debt outstanding at $838 billion (50 percent of the total), followed by commercial banks with $480 billion (28 percent), life insurance companies with $168 billion (10 percent), state and local governments with $106 billion (6 percent), and CMBS, CDO and other ABS issues with $51 billion (3 percent).
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING
In the fourth quarter of 2020, agency and GSE portfolios and MBS saw the largest rise in dollar terms in their holdings of commercial/multifamily mortgage debt, with an increase of $40.2 billion (5.0 percent). Commercial banks increased their holdings by $7.0 billion (0.5 percent), CMBS, CDO and other ABS issues increased their holdings by $4.7 billion (0.9 percent), and life insurance companies increased their holdings by $3.0 billion (0.5 percent).
In percentage terms, agency and GSE portfolios and MBS saw the largest increase - 5.0 percent - in their holdings of commercial/multifamily mortgages.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING
The $41.8 billion rise in multifamily mortgage debt outstanding between the third and fourth quarters of 2020 represented a 2.5 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase, at $40.2 billion (5.0 percent), in their holdings of multifamily mortgage debt. Commercial banks increased their holdings of multifamily mortgage debt by $1.4 billion (0.3 percent). State and local government increased holdings by 0.9 percent to $992 million. CMBS, CDO, and other ABS issues saw the largest decline (1.7 percent) in their holdings, by $893 million.
In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages (16.1 percent), and private pension funds saw the biggest decrease (10.0 percent).
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2020
Between December 2019 and December 2020, agency and GSE portfolios and MBS saw the largest gain (12.6 percent) in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $94 billion. Commercial banks increased their holdings of commercial/multifamily mortgages by $57.9 billion (4.1 percent).
In percentage terms, agency and GSE portfolios and MBS saw the largest increase (12.6 percent) in their holdings of commercial/multifamily mortgages.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2020
The $127.9 billion rise in multifamily mortgage debt outstanding during 2020 represents an 8.2 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt at 13 percent ($93.7 billion). Federal government saw the largest decrease in their holdings down $479 million (4.1 percent).
In percentage terms, agency and GSE portfolios and MBS recorded the largest increase in their holdings of multifamily mortgages, at 13 percent, while private pension funds saw the largest decrease, at 31 percent.
