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New Data Details Commercial Mortgage Market Activities

Phil Hall
Jun 14, 2016

The commercial mortgage market was in the data spotlight today, with a pair of reports outlining challenges in that sector’s performance.

The Mortgage Bankers Association (MBA) reported that the level of commercial/multifamily mortgage debt outstanding increased by $35.3 billion during the first quarter of 2016, up 1.2 percent from the fourth quarter of 2015. The total commercial/multifamily debt outstanding reached $2.86 trillion at the end of the first quarter, while the separate level of multifamily mortgage debt outstanding rose to $1.07 trillion, up 1.7 percent from the fourth quarter of 2015.

Commercial banks held the largest share of commercial/multifamily mortgages in the first quarter with $1.1 trillion (39 percent of the total). Commercial mortgage-backed securities (CMBS), collateralized debt obligation and other asset backed securities were the second largest holders, with $504 billion (18 percent of the total), while agency and government-sponsored enterprise portfolios and mortgage-backed securities held $472 billion (17 percent of the total) and life insurance companies held $398 billion (14 percent of the total).

“The amount of commercial and multifamily mortgage debt outstanding continues to grow at a strong clip,” said Jamie Woodwell, MBA’s vice president of commercial real estate research.  “Bank holdings and multifamily loans backed by Fannie Mae and Freddie Mac drove growth during the quarter. However, the balance of loans held in commercial mortgage-backed securities continues to decline and has now fallen by one third since it peaked in 2007, as more CMBS loans are paid-off and paid down than are originated.”

Separately, Fitch Ratings reported that the U.S. CMBS delinquency rate rose in May for the second consecutive month, increasing six basis points to 2.98 percent. The dollar balance of late-pays took a $173 million leap, reaching $11.22 billion.

"The increase was largely driven by the addition of three loans over $50 million into the [delinquent] index, a large mixed-use loan and two large retail portfolio loans," said Fitch Managing Director Mary MacNeill.

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