Commercial and multifamily mortgage debt outstanding increased 1.7%, or $61 billion, in the first quarter, according to the latest quarterly report from the Mortgage Bankers Association (MBA).
Total commercial and multifamily debt outstanding increased to $3.72 trillion at the end of the first quarter, with multifamily debt increasing 1.8%, or $28 billion, to $1.6 trillion from fourth quarter 2019.
“The rise in commercial and multifamily mortgage debt in the first three months of the year carried forward the strong level of activity during 2019. Rising property values, strong incomes, and low interest rates supported increased borrowing and lending,” said Jamie Woodwell, MBA vice president of commercial real estate research.
However, he added, “The coming months are likely to see greater differentiation in debt levels, both by capital source and property type, as investors and lenders assess market conditions.”
The four major investor groups include banks and thrifts; federal agency and government-sponsored enterprise (GSE) portfolios and mortgage-backed securities (MBS); life insurance companies; and commercial mortgage-backed securities (CMBS), collateralized debt obligation (CDO), and other asset-backed securities (ABS) issues.
According to the MBA, commercial banks hold the largest share (39%) of commercial/multifamily mortgages at $1.4 trillion. Agency and GSE portfolios and MBS are second at $752 billion. Life insurance companies hold $572 billion, and CMBS, CDO, and other ABS issues hold $516 billion.
Looking specifically at multifamily mortgages in the first quarter, agency and GSE portfolios and MBS hold the largest share—almost half—of multifamily debt outstanding at $752 billion. Following are banks and thrifts at $469 billion, life insurance companies with $165 billion, state and local governments with $93 billion, and CMBS, CDO, and other ABS issues at $52 billion. Nonfarm, noncorporate businesses hold $19 million.
For the $28 billion increase in multifamily mortgage debt outstanding from the fourth quarter of 2019, commercial banks saw the largest gain—$10.1 billion in their holdings. Agency and GSE portfolios and MBS increased their holdings by $7.4 billion, and CMBS, CDO, and other ABS issues rose by $6.9 million. Federal government saw the largest decrease in holdings, down $228 million.
