According to the Mortgage Bankers Association, the total commercial/multifamily debt outstanding in the U.S. rose to $3.01 trillion at the end of the first quarter of 2017, the first time it has broken the $3 trillion mark. Multifamily mortgage debt outstanding rose to $1.17 trillion, an increase of $23.4 billion, or 2.0 percent, from the fourth of quarter of 2016.
“The amount of commercial and multifamily mortgage debt outstanding continued to grow during the first quarter,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Almost two-thirds of the growth came from increases in multifamily mortgage debt outstanding, and 80 percent of that growth came from portfolios and MBS held or guaranteed by federal government agencies and the GSEs.”
MULTIFAMILY MORTGAGE DEBT OUTSTANDING
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $540 billion, or 46 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $390 billion, or 33 percent of the total. State and local government hold $92 billion, or 8 percent of the total; life insurance companies hold $69 billion, or 6 percent of the total; CMBS, CDO and other ABS issues hold $44 billion, or 4 percent of the total, and nonfarm noncorporate business holds $13 billion, or one percent of the total.
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING
In the first quarter of 2017, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $24.6 billion, or 2.1 percent. Agency and GSE portfolios and MBS increased their holdings by $18.9 billion, or 3.6 percent, and life insurance companies increased their holdings by $10.3 billion, or 2.4 percent. CMBS, CDO and other ABS issues saw the largest decrease at $21.3 billion, or down 4.6 percent.
Woodwell continued: “In addition, recent releases from the Federal Reserve show that during the second quarter of 2017, bank multifamily portfolios stopped growing and remain relatively flat, while their holdings of other commercial property loans have continued to grow.”
The level of commercial/multifamily mortgage debt outstanding rose by $37.6 billion in the first quarter of 2017, a 1.3% increase over the fourth quarter of 2016, with three of the four major investor groups increasing their holdings.