Commercial/multifamily mortgage debt outstanding continued to grow in second quarterMortgagePress.comcommercial, multifamily, mortgage debt, Federal Reserve Board Flow of Funds data, CMBS, GSEs
The level of commercial/multifamily mortgage debt outstanding
grew by 1.5 percent in the second quarter, to $3.44 trillion,
according to the Mortgage Bankers Association's (MBA) analysis of
the Federal Reserve Board Flow of Funds data.
The $3.44 trillion in commercial/multifamily mortgage debt
outstanding recorded by the Federal Reserve was an increase of
$51.3 billion from the first quarter 2008. Multifamily mortgage
debt outstanding grew to $875 billion, an increase of $16.3 billion
or 1.9 percent from first quarter.
"Despite the persistent credit crunch, investors increased their
holdings of commercial/multifamily mortgages in the second
quarter," said Jamie Woodwell, MBA's Vice President of Commercial
Real Estate Research. "The only major investor group to see a
decline in their holdings was the commercial mortgage-backed
securities (CMBS) market, which has been most profoundly affected
by the credit crunch. Other investor groups including commercial
banks, life insurance companies, thrifts and the
government-sponsored enterprises (GSEs) increased their holdings
over 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 (included under Life
Insurance Companies in this data) and in CMBS, collateralized debt
obligations (CDOs) and other asset backed securities (ABS) for
which the security issuers and trustees hold the note.
Commercial banks continue to hold the largest share of
commercial/multifamily mortgages, $1.46 trillion, or 43 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, which drive the
underwriting, pricing and performance of these loans. An 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 $762 billion, or 22
percent of the total. Life insurance companies hold $313 billion,
or 9 percent of the total, and savings institutions hold $230
billion, or 7 percent of the total. The GSEs and agency - and GSE -
backed mortgage pools (including Fannie Mae, Freddie Mac and Ginnie
Mae) hold $146 billion in multifamily loans that support the
mortgage-backed securities they issue and an additional $168
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 purchase
and hold a large number of CMBS, CDO and other ABS issues. These
loans appear in the CMBS, CDO and other ABS category previously
referenced.
Looking just at multifamily mortgages, the GSEs and Ginnie Mae
hold the largest share of multifamily mortgages, with $146 billion
in federally related mortgage pools and $168 billion in their own
portfolios or 36 percent of the total multifamily debt outstanding.
They are followed by commercial banks with $176 billion, or 20
percent of the total. CMBS, CDO and other ABS issuers hold $118
billion, or 14 percent of the total; savings institutions with $97
billion, or 11 percent of the total; state and local governments
with $70 billion, or eight percent of the total; and life insurance
companies with $50 billion, or six percent of the total.
In the second quarter of 2008, commercial banks saw the largest
increase in dollar terms in their holdings of
commercial/multifamily mortgage debt - an increase of $35 billion,
or three percent, which represents 69 percent of the total $51
billion increase. Life insurance companies increased their holdings
of commercial/multifamily mortgages by $4 billion, or 8 percent.
GSEs increased their holdings of commercial/multifamily mortgages
by $10 billion, or six percent - representing 20 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 2.3 percent.
In percentage terms, GSEs saw the biggest increase in their
holdings of commercial/multifamily mortgages, a jump of six
percent. CMBS, CDO, and other ABS issues saw their holdings
decrease by 1.3 percent.
The $16 billion increase in multifamily mortgage debt
outstanding between the first quarter and second quarter of 2008
represents a two percent increase. In dollar terms, GSEs saw the
largest increase in their holdings of multifamily mortgage debt, an
increase of $10 billion, or six percent, which represents 62
percent of the total increase. Agency and GSE-backed mortgage pools
increased their holdings of multifamily mortgage debt by $3.3
billion, or 2.3 percent. Commercial banks increased by $3.2
billion, or 1.8 percent. CMBS, CDO and other ABS issues saw the
biggest drop in their holdings of multifamily mortgage debt by $3
billion, or -2.7 percent.
In percentage terms, GSEs recorded the biggest increase in their
holdings of multifamily mortgages at 6.4 percent. CMBS, CDO and
other ABS issues saw the biggest drop of -2.7 percent.
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