The level of commercial/multifamily mortgage debt outstanding increased by $24.5 billion, or one percent, in the second quarter of 2013, as three of the four major investor groups increased their holdings, according to the Mortgage Bankers Association (MBA). The $2.45 trillion in outstanding commercial/multifamily mortgage debt was $24.5 billion higher than the first quarter 2013 figure. Multifamily mortgage debt outstanding rose to $875 billion, an increase of $10.9 billion, or 1.3 percent, from first quarter 2013.
“A strong appetite among investors to put their money to work in commercial and multifamily mortgages led to an increase in the level of mortgage debt outstanding,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research. “In the second quarter alone, banks increased their holdings of commercial and multifamily mortgages by $16 billion; Fannie Mae, Freddie Mac and FHA increased their multifamily holdings and guarantees by $5.6 billion and life insurance companies increased their commercial and multifamily holdings by $4.0 billion.”
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).
Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $855 billion, or 35 percent of the total.
CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $557 billion, or 23 percent of the total. Agency/GSE portfolios and MBS hold $388 billion, or 16 percent of the total, and life insurance companies hold $326 billion, or 13 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 $388 billion, or 44 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $244 billion, or 28 percent of the total. CMBS, CDO and other ABS issues hold $75 billion, or nine percent of the total; state and local governments hold $75 billion, or nine percent of the total; life insurance companies hold $51 billion, or six percent of the total; and nonfarm noncorporate business holds $15 billion, or two percent of the total.
In the second quarter of 2013, bank and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $16.4 billion, or two percent. Agency and GSE portfolios and MBS increased their holdings of commercial/multifamily mortgages by $5.6 billion, or two percent. The household sector saw the largest decrease at $1.9 billion, or 43 percent.
In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 12 percent. The household sector saw their holdings decrease 43 percent.
The $10.9 billion increase in multifamily mortgage debt outstanding between the first and second quarters of 2013 represents a 1.3 percent increase. In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt, an increase of $7.4 billion, or three percent. Agency and GSE portfolios and MBS increased their holdings of multifamily mortgage debt by $5.6 billion, or 1.5 percent. REITs increased by $668 million, or 31 percent. CMBS, CDO, and other ABS issues saw the biggest decline in their holdings of multifamily mortgage debt, by $2.5 billion, or 3.3 percent.
In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages, at 31 percent. Finance companies saw the biggest decrease, at 20 percent.