Commercial/multifamily mortgage debt outstanding increases during fourth quarterMortgagePress.comMBA, statistics, commercial/multifamily mortgage debt, Federal Reserve Board Flow of Funds, GSEs
The level of commercial/multifamily mortgage debt outstanding
grew by 0.7 percent in the fourth quarter of 2008, to $3.5
trillion, according to the Mortgage Bankers Association (MBA)
analysis of the Federal Reserve Board Flow of Funds data. The total
was an increase of $166 billion, or 5 percent from the end of
2007.
The $3.5 trillion in commercial/multifamily mortgage debt
outstanding recorded by the Federal Reserve was an increase of $23
billion from the third quarter of 2008. Multifamily mortgage debt
outstanding grew to $900 billion, an increase of $5.4 billion or
0.6 percent from the third quarter.
"Counter to what many expected, investors increased their
holdings of commercial and multifamily mortgages during the fourth
quarter," said Jamie Woodwell, MBA's Vice President of Commercial
Real Estate Research. "Banks, thrifts, Fannie Mae, Freddie Mac,
life insurance companies and other lenders extended additional
credit to the market during the fourth quarter, lending more in new
commercial and multifamily mortgages than they saw paid off or paid
down on existing loans."
Commercial banks continue to hold the largest share of
commercial/multifamily mortgages at $1.55 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 and not the income
derived from the property's rents and leases that drive 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, with only 52 percent being income
property loans.
CMBS, CDO and other ABS issues are the second largest holders of
commercial/multifamily mortgages, holding $746 billion, or 21
percent of the total. Life insurance companies hold $316 billion,
or 9 percent of the total, and savings institutions hold $193
billion, or 5.5 percent of the total. Government sponsored
enterprises (GSEs) and Agency- and GSE- backed mortgage pools,
including Fannie Mae, Freddie Mac and Ginnie Mae, hold $189 billion
in "whole" loans in their own portfolios and an additional $149
billion in multifamily loans that support the mortgage-backed
securities they issue. This represents 10 percent of the total
outstanding commercial/multifamily mortgages.
Multifamily mortgage debt outstanding
For multifamily mortgages, the GSEs and Ginnie Mae hold the largest
share, with $189 billion in their own portfolios and $149 billion
in federally related mortgage pools - 38 percent of the total
multifamily debt outstanding. They are followed by commercial banks
with $214 billion, or 24 percent of the total; CMBS, CDO and other
ABS issuers with $115 billion, or 13 percent of the total; state
and local governments with $69 billion, or 8 percent of the total;
savings institutions with $65 billion, or seven percent of the
total; and life insurance companies with $50 billion, or 6 percent
of the total.
Changes in commercial/multifamily mortgage debt
outstanding
In the fourth quarter of 2008, commercial banks saw the largest
increase in dollar terms in their holdings of
commercial/multifamily mortgage debt--an increase of $23 billion,
or 1.5 percent. GSEs increased their holdings of
commercial/multifamily mortgages by $10 billion, or six
percent.
In percentage terms, GSEs saw the biggest increase in their
holdings of commercial/multifamily mortgages, a jump of 6 percent,
while other insurance companies saw their holdings decrease by nine
percent.
Changes in multifamily mortgage debt
outstanding
The $5 billion increase in multifamily mortgage debt outstanding
between the third quarter 2008 and fourth quarter 2008 represents a
0.6 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. Agency- and GSE-backed
mortgage pools increased their holdings of multifamily mortgage
debt by $720 million, or 0.5 percent. Private pension funds
increased by $222 million, or eight percent.
In percentage terms, private pension funds recorded the biggest
increase in their holdings of multifamily mortgages at 8 percent,
while finance companies saw the biggest drop at -12 percent.
Changes in commercial/multifamily mortgage debt
outstanding during 2008
Between December 2007 and December 2008, commercial banking saw
the largest increase in dollar terms in their holdings of
commercial/multifamily mortgage debt--an increase of $152 billion,
or 11 percent. GSEs increased their holdings of
commercial/multifamily mortgages by $42 billion or 28 percent.
Finance companies experienced a net increase of $13 billion or 23
percent.
In percentage terms, GSEs saw the biggest increase in their
holdings of commercial/multifamily mortgages by 28 percent, and
other insurance companies saw the biggest decline at -11
percent.
The $57 billion increase in multifamily mortgage debt
outstanding during 2008 represents a seven percent increase. In
dollar terms, commercial banking, driven by the acquisition of
Washington Mutual by J.P. Morgan, increased their holdings of
multifamily mortgage debt by $46 billion or 27 percent.
In percentage terms, private pension funds recorded the biggest
increase in their holdings of multifamily mortgages, 38 percent,
while savings institutions saw the biggest drop, -30 percent.
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