The level of commercial/multifamily mortgage debt outstanding remained relatively unchanged in the first quarter, at $3.48 trillion, according to the Mortgage Bankers Association (MBA) analysis of the Federal Reserve Board Flow of Funds data. The $3.48 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was a decrease of $33 million from the fourth quarter 2008. Multifamily mortgage debt outstanding grew to $908 billion, an increase of $5 billion or 0.6 percent from fourth quarter.
"Banks, thrifts Fannie Mae and Freddie Mac all increased their holdings of commercial and multifamily mortgages during the first quarter, while run-off among CMBS and life company loans decreased those investors' holdings," said Jamie Woodwell, MBA's vice president of commercial real estate research. "The relatively long-term nature of commercial real estate finance has meant greater stability in the levels of commercial and multifamily mortgage debt outstanding than is seen among many other types of credit."
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, $1.56 trillion, or 45 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. 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. (Note: 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.)
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 issuers are the second largest holders of commercial/multifamily mortgages, holding $736 billion, or 21 percent of the total. Life insurance companies hold $316 billion, or 9 percent of the total, and savings institutions hold $194 billion, or 6 percent of the total. The GSEs, agency-backed mortgage pools and GSE-backed mortgage pools, including Fannie Mae, Freddie Mac and Ginnie Mae, hold $191 billion in multifamily loans that support the mortgage-backed securities they issued and an additional $154 billion in "whole" loans in their own portfolios. This represents a total share of 10 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 $191 billion in federally related mortgage pools and $154 billion in their own portfolios or 38 percent of the total multifamily debt outstanding. They are followed by commercial banks with $217 billion, or 24 percent of the total. CMBS, CDO and other ABS issuers hold $113 billion, or 13 percent of the total; state and local governments with $69 billion, or 8 percent of the total; savings institutions with $66 billion, or seven percent of the total; and life insurance companies with $51 billion, or six percent of the total.
In the first quarter of 2009, commercial banks saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt--an increase of $7 billion, or 0.4 percent. GSEs increased their holdings of commercial/multifamily mortgages by $3 billion, or 1.7 percent. Agency and GSE-backed mortgage pools increased their holdings of commercial/multifamily mortgages by $2 billion, or 1 percent. Federal government increased their holdings of commercial/multifamily mortgages by $1.4 billion, or two percent.
In percentage terms, GSEs saw the largest increase in their holdings of commercial/multifamily mortgages, a jump of 1.7 percent. Nonfinancial corporate business saw their holdings decrease by 21 percent.
The $5 billion increase in multifamily mortgage debt outstanding between the fourth quarter 2008 and first quarter 2009 represents a 0.6 percent increase. In dollar terms, GSEs saw the largest increase in their holdings of multifamily mortgage debt, an increase of $3 billion, or 2 percent. Commercial banks increased their holdings of multifamily mortgage debt by $2 billion, or 0.7 percent. Agency- and GSE-backed mortgage pools increased by $1.5 billion, or one percent. CMBS, CDO and other ABS issues saw the biggest drop in their holdings of multifamily mortgage debt by $1 billion, or -1 percent.
In percentage terms, GSEs recorded the biggest increase in their holdings of multifamily mortgages at 1.7 percent. Nonfinancial corporate business saw the biggest drop of -22 percent.
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