The level of commercial/multifamily mortgage debt outstanding decreased by $10.4 billion, or 0.4 percent, in the second quarter of 2012, as the balance of loans in CMBS, CDO and other ABS issues continued to decline, according to the Mortgage Bankers Association (MBA). The $2.37 trillion in outstanding commercial/multifamily mortgage debt was $10.4 billion lower than the first quarter 2012 figure. Multifamily mortgage debt outstanding rose to $826 billion, an increase of $5.4 billion or 0.7 percent from the first quarter of 2012. MBA’s analysis is based on data from the Federal Reserve Board’s Flow of Funds Account of the United States and the Federal Deposit Insurance Corporation’s Quarterly Banking Profile.
“CMBS loans paid-off, paid-down and were liquidated at a far faster pace than new CMBS loans were originated during the quarter,” said Jamie Woodwell, MBA’s VP of commercial real estate research. “The drop in CMBS balances more than offset the increases in holdings by Fannie Mae, Freddie Mac and FHA, banks and life insurance companies.”
The analysis summarizes the holdings 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 issues”).
MBA recently improved its reporting of commercial and multifamily mortgage debt outstanding. The new reporting excludes two categories of loans that had formerly been included—loans for acquisition, development and construction and loans collateralized by owner-occupied commercial properties. By excluding these loan types, the analysis here more accurately reflects the balance of loans supported by office buildings, retail centers, apartment buildings and other income-producing properties that rely on rents and leases to make their payments.
Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $815 billion, or 34 percent of the total. CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $555 billion, or 23 percent of the total. Agency/GSE portfolios and MBS hold $360 billion, or 15 percent of the total, and life insurance companies hold $320 billion, or 14 percent of the total. Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the “CMBS, CDO and other ABS” category.
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $360 billion, or 44 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $225 billion, or 27 percent of the total. CMBS, CDO and other ABS issues hold $83 billion, or 10 percent of the total; state and local governments hold $71 billion, or 9 percent of the total; life insurance companies hold $51 billion, or six percent of the total; and the federal government holds $14 billion, or two percent of the total.
In the second quarter of 2012, CMBS, CDO and other ABS issues saw the largest decrease in dollar terms in their holdings of commercial/multifamily mortgage debt—a decrease of $19.8 billion, or 3.4 percent. Finance companies decreased their holdings of commercial/multifamily mortgages by $5.1 billion, or 8.4 percent. Agency and GSE portfolios and MBS saw the largest increase of $7.1 billion, or two percent.
In percentage terms, the household sector saw the largest decrease in their holdings of commercial/multifamily mortgages, a decrease of 13.4 percent. The other insurance companies sector saw their holdings increase 4.1 percent.
The $5.4 billion increase in multifamily mortgage debt outstanding between the first and second quarter of 2012 represents a 0.7 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $7.1 billion, or two percent. Commercial banks increased their holdings of multifamily mortgage debt by $3.6 billion, or 1.6 percent. Life insurance companies increased by $576 million, or 1.2 percent. CMBS, CDO, and other ABS issues saw the biggest decline in their holdings of multifamily mortgage debt, by $4.8 billion or 5.4 percent.
In percentage terms, private pension funds recorded the largest increase in holdings of multifamily mortgages, at 8.6 percent. CMBS, CDO, and other ABS issues saw the biggest decrease, at 5.4 percent.