MBA releases Q4 2006 commercial/multi-family mortgage debt studyMortgagePress.comCommercial multi-family mortgage debt
At the end of 2006, $2.95 trillion in commercial/multi-family
mortgage debt outstanding was recorded by the Federal Reserve an
increase of $333 billion, or 12.7 percent, from the end of 2005. In
the fourth quarter alone, commercial and multi-family mortgage debt
outstanding increased by $99 billion, or 3.5 percent. At the end of
2006, multi-family mortgage debt outstanding stood at $731 billion
an increase of $51 billion or 7.5 percent over the year and $15
billion, or 2.1 percent, in the fourth quarter alone.
"The growth in commercial/multi-family mortgage holdings comes
amid a number of signs of continued market strength," said Jamie
Woodwell, the Mortgage Bankers Association's (MBA's) senior
director for commercial/multi-family research. "The most recent
Federal Reserve Beige Book characterized commercial real estate
markets as strong, solid and firming. We also see low delinquencies
and other signs of mortgage performance continuing to show
strength."
The Federal Reserve Flow of Funds data summarizes the holding 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
the Federal Reserve 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 trustees hold the notes (and which appear here
under CMBS, CDO and other ABS issues).
Commercial banks continue to hold the largest share of
commercial/multi-family mortgages with almost $1.3 trillion, or 44
percent of the total. Many of the commercial mortgage loans
reported by commercial banks, however, are actually commercial and
industrial loans to which a piece of commercial property has been
pledged as collateral. It is the borrower's business income not the
income derived from the property's rents and leases that drives the
underwriting, pricing and performance of these loans. Since the
other loans reported here are generally income property loans,
meaning that the income primarily comes from rents, the commercial
bank numbers are not comparable.
CMBS, CDO and other ABS pools are the second largest holders of
commercial/multi-family mortgages holding $630 billion, or 21
percent of the total. Life insurance companies hold $284 billion,
or 10 percent of the total, and savings institutions hold $203
billion, or seven percent of the total. Government
sponsored-enterprises (GSEs) and agency- and GSE-backed mortgage
pools including Fannie Mae, Freddie Mac and Ginnie Mae hold $140
billion in multi-family loans that support the mortgage-backed
securities they issue (referred to here as agency- and GSE-backed
mortgage pools) and an additional $80 billion whole loans in their
own portfolios, for a total share of seven percent of outstanding
commercial/multi-family mortgages. (As noted above, many life
insurance companies, banks and the GSEs also purchase and hold a
large number of CMBS, CDO and other ABS issues. These loans appear
in the CMBS, CDO and other ABS category referenced above.)
Looking just at multi-family mortgages, the GSEs and Ginnie Mae
hold the largest share of multi-family mortgages, with $140 billion
in agency- and GSE-backed mortgage pools and $80 billion in their
own portfolios 30 percent of the total multi-family debt
outstanding. They are followed by commercial banks with $160
billion, or 22 percent of the total; CMBS, CDO and other ABS issues
with $103 billion, or 14 percent of the total; savings institutions
with $96 billion, or 13 percent of the total; state and local
governments with $61 billion, or eight percent of the total; and
life insurance companies with $45 billion, or six percent of the
total.
Between December 2005 and December 2006, commercial banks saw
the largest increase in dollar terms in their holdings of
commercial/multi-family mortgage debt an increase of $161 billion,
or 14 percent, which represents 48 percent of the total $333
billion increase. CMBS, CDO and other ABS issues increased their
holdings of commercial/multi-family mortgages by $108 billion, or
21 percent representing 32 percent of the net increase in
commercial/multi-family mortgage debt outstanding. Life insurance
companies experienced a net increase of $17 billion, or seven
percent.
In percentage terms, real estate investment trusts (REITs) saw
the biggest increase in their holdings of commercial/multi-family
mortgages a jump of 36 percent while private pension funds saw the
biggest drop (a net change of negative four percent).
The $51 billion increase in multi-family mortgage debt
outstanding during 2006 represents an eight percent increase. In
dollar terms, commercial banks saw the largest increase in their
holdings of multi-family mortgage debt an increase of $20 billion,
or 14 percent, which represents 39 percent of the total increase.
CMBS issues saw an increase of $13 billion, or 15 percent, in their
holdings.
In percentage terms, REITs recorded the biggest increase in
their holdings of multi-family mortgages 52 percent while private
pension funds saw the biggest drop negative five percent. (Note
that a large factor in the increase in commercial bank holdings and
decrease in savings institution holdings is the decision by
CitiBank to surrender two of its thrift charters and fold those
operations into its national bank. This resulted in a move of
CitiBank thrift mortgage holdings from the savings institutions
category to the commercial bank category.)
In the fourth quarter of 2006, CMBS, CDO and other ABS issues
saw the largest increase in dollar terms in their holdings of
commercial/multi-family mortgage debt an increase of $49 billion,
or eight percent, which represents 49 percent of the total $99
billion increase. Commercial banks increased their holdings of
commercial/multi-family mortgages by $44 billion, or four percent
representing 44 percent of the net increase in
commercial/multi-family mortgage debt outstanding.
In percentage terms, CMBS, CDOs and other ABS issues saw the
biggest increase in their holdings of commercial/multi-family
mortgages a jump of eight percent while savings institutions saw
the biggest drop (a net change of negative-four percent).
The $15 billion increase in multi-family mortgage debt
outstanding between the third and fourth quarters represents a two
percent increase. In dollar terms, commercial banks saw the largest
increase in their holdings of multi-family mortgage debt an
increase of $10 billion, or seven percent, which represents 67
percent of the total increase. CMBS, CDO and other ABS issues
increased their holdings of multi-family mortgage debt by $6
billion, or seven percent.
In percentage terms, commercial banks recorded the biggest
increase in their holdings of multi-family mortgages seven percent
while savings institutions saw the biggest drop negative eight
percent.
For more information, visit www.mbaa.org.
