Commercial/multifamily mortgage debt outstanding grows in Q1MortgagePress.comMBA, mortgage debt, commercial, multifamily, CMBS, Fannie Mae, Freddie Mac
The level of commercial/multifamily mortgage debt outstanding
grew by 1.8 percent in the first quarter, to $3.4 trillion,
according to the Mortgage Bankers Association (MBA) analysis of the
Federal Reserve Board Flow of Funds data.
The $3.4 trillion in commercial/multifamily mortgage debt
outstanding recorded by the Federal Reserve was an increase of
$60.8 billion from the fourth quarter 2007. Multifamily mortgage
debt outstanding grew to $856 billion, an increase of $18.5 billion
or 2.2 percent from the fourth quarter.
"Investors continue to increase their holdings of
commercial/multifamily mortgages," said Jamie Woodwell, MBA's
senior director of commercial/multifamily research. "The global
credit crunch meant a net decline in the balance of mortgages held
in CMBS, CDO and other ABS, but banks, thrifts, life insurance
companies, Fannie Mae, Freddie Mac and nearly every other investor
group increased their holdings of commercial and multifamily
mortgages during the quarter."
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
this 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 issuers and trustees hold the note (and which appear here
under CMBS, CDO and other ABS issuers).
Commercial banks continue to hold the largest share of
commercial/multifamily mortgages, $1.43 trillion, or 42 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. A MBA
Research PolicyNote found that among the top 10 commercial real
estate bank lenders, 48 percent of their aggregate balance of
commercial (non-multifamily) real estate loans were related to
owner-occupied properties.
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 issues are the second largest holders of
commercial/multifamily mortgages, holding $777 billion, or 23
percent of the total. Life insurance companies hold $309 billion,
or 9 percent of the total, and savings institutions hold $226
billion, or 7 percent of the total. Government Sponsored
Enterprises (GSEs) and Agency- and GSE- backed mortgage pools,
including Fannie Mae, Freddie Mac and Ginnie Mae, hold $143 billion
in multifamily loans that support the mortgage-backed securities
they issue and an additional $158 billion "whole" loans in their
own portfolios, for a total share of 9 percent of outstanding
commercial/multifamily 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.)
Multifamily mortgage debt outstanding
Looking just at multifamily mortgages, the GSEs and Ginnie Mae
hold the largest share of multifamily mortgages, with $143 billion
in federally related mortgage pools and $158 billion in their own
portfolios - 35 percent of the total multifamily debt outstanding.
They are followed by commercial banks with $173 billion, or 20
percent of the total; CMBS, CDO and other ABS issuers with $122
billion, or 14 percent of the total; savings institutions with
$94.5 billion, or 11 percent of the total; state and local
governments with $67 billion, or eight percent of the total; and
life insurance companies with $49 billion, or 6 percent of the
total.
Changes in commercial/multifamily mortgage debt
outstanding
In the first quarter of 2008, commercial banks saw the largest
increase in dollar terms in their holdings of
commercial/multifamily mortgage debt - an increase of $30 billion,
or 2 percent, which represents 49 percent of the total $61 billion
increase. Savings institutions increased their holdings of
commercial/multifamily mortgages by $10 billion, or 5 percent.
Government Sponsored Enterprises (GSEs) increased their holdings of
commercial/multifamily mortgages by $10 billion, or 7 percent -
representing 17 percent of the net increase in
commercial/multifamily mortgage debt outstanding. Agency- and
GSE-backed mortgage pools increased their holdings of
commercial/multifamily mortgages by $3 billion, or 2.5 percent.
In percentage terms, finance companies saw the biggest increase
in their holdings of commercial/multifamily mortgages - a jump of
15 percent, while state and local government retirement funds saw
their holdings decrease by 2.6 percent.
Changes in multifamily mortgage debt
outstanding
The $18 billion increase in multifamily mortgage debt outstanding
between the fourth quarter 2007 and first quarter 2008 represents a
2.2 percent increase. In dollar terms, Government Sponsored
Enterprises saw the largest increase in their holdings of
multifamily mortgage debt - an increase of $10 billion, or 7
percent, which represents 54 percent of the total increase. Agency-
and GSE-backed mortgage pools increased their holdings of
multifamily mortgage debt by $3.4 billion, or 2.5 percent.
Commercial banks increased by $4 billion, or 2.6 percent. CMBS, CDO
and other ABS issues saw the biggest drop in their holdings of
multifamily mortgage debt by $9 billion, or -1.1 percent.
In percentage terms, government-sponsored enterprises recorded
the biggest increase in their holdings of multifamily mortgages,
seven percent, while state and local government retirement funds
saw the biggest drop, -2.6 percent.
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