Commercial/multi-family debt increasesMortgagePress.comMortgage Bankers Association, Federal Reserve Board Flow of Funds data
The level of commercial/multi-family mortgage debt outstanding
grew by 2.9 percent in the third quarter of 2006, reaching $2.845
trillion, according to the Mortgage
Bankers Association (MBA) analysis of the Federal Reserve Board Flow
of Funds data. The $2.845 trillion in commercial/multi-family
mortgage debt outstanding recorded by the Federal Reserve was an
increase of $79.9 billion, or 2.9 percent, from the second quarter
of 2006. Multi-family mortgage debt outstanding grew to $714
billion at the end of the third quarter - an increase of $10.8
billion, or 1.5 percent, from the second quarter.
"Nearly every investor group increased their stake in
commercial/multi-family mortgages in the third quarter," said Jamie
Woodwell, MBA's senior director of commercial/multi-family
research. "As investors assess different investment options for
their capital, commercial/multi-family mortgages continue to
attract a great deal of interest."
Commercial banks continued to hold the largest share of
commercial/multi-family mortgages, with more than $1.2 trillion, or
44 percent of the total. Many of the commercial mortgage loans
reported by commercial banks, however, were actually "commercial
and industrial" loans, to which pieces of commercial properties had
been pledged as collateral. It was the borrowers' business income -
not the income derived from the properties' rents and leases - that
drove the underwriting, pricing and performance of these loans.
Since the other loans examined by MBA were generally income
property loans, meaning that the income primarily came from rents,
the commercial bank numbers are not comparable.
Commercial mortgage-backed securities (CMBS), collateralized
debt obligations (CDO) and other asset-backed securities (ABS)
pools were the second largest holders of commercial/multi-family
mortgages, holding $583 billion, or 21 percent of the total. Life
insurance companies held $279 billion, or 10 percent of the total,
and savings institutions hold $212 billion, or eight percent of the
total. Government-sponsored enterprises (GSEs) and federally
related mortgage pools, including Fannie Mae, Freddie Mac and
Ginnie Mae, held $137 billion in multi-family loans that supported
the mortgage-backed securities they issued (referred to here as
federally related mortgage pools) and an additional $79 billion
"whole" loans in their own portfolios, for a total share of eight
percent of outstanding commercial/multi-family mortgages.
Looking just at multi-family mortgages, the GSEs and Ginnie Mae
held the largest share of multi-family mortgages, with $137 billion
in federally related mortgage pools and $79 billion in their own
portfolios - 30 percent of the total multi-family debt outstanding.
They were followed by commercial banks with $149 billion, or 21
percent of the total; savings institutions with $103 billion, or 15
percent of the total; CMBS, CDO and other ABS issuers with $97
billion, or 14 percent of the total; state and local governments
with $60 billion, or eight percent of the total; and life insurance
companies with $44 billion, or six percent of the total.
In the third quarter of 2006, commercial banks saw the largest
increase in dollar terms in their holdings of
commercial/multi-family mortgage debt - an increase of $36 billion,
or three percent, which represented 45 percent of the total $79.9
billion increase. CMBS, CDO and other ABS issuers increased their
holdings of commercial/multi-family mortgages by $26 billion, or
five percent, representing 33 percent of the net increase in
commercial/multi-family mortgage debt outstanding. In percentage
terms, real estate investment trusts saw the biggest increase in
their holdings of commercial/multi-family mortgages - a jump of 14
percent - while state and local government retirement funds fell
one percent.
The $10.8 billion increase in multi-family mortgage debt
outstanding between the second and third quarters represented a 1.5
percent increase. In dollar terms, CMBS, CDO and other ABS issuers
saw the largest increase in their holdings of multi-family mortgage
debt - an increase of $3.1 billion, or 3.3 percent, which
represented 29 percent of the total increase. Federally related
mortgage pools increased their holdings of multi-family mortgage
debt by $2.5 billion, or 1.6 percent. In percentage terms, CMBS,
CDO and other ABS issuers recorded the biggest increase in their
holdings of multi-family mortgages, 3.3 percent, while finance
companies saw the biggest drop, -2.2 percent.
For more information, visit www.mbaa.org.
