Outstanding Commercial Mortgage Debt Rises in Q1 as Pandemic Eases

There was a 1.1% increase in outstanding commercial and multifamily mortgage debt during the first quarter, but the majority came from the housing side of the equation, the Mortgage Bankers Association said.

Total commercial and multifamily debt outstanding was $3.93 trillion as of March 31, up $44.6 billion from the end of 2020. Multifamily debt ended the first quarter at 1, $7 trillion, an increase of $28.8 billion or 1.7% over the previous three months.

On March 31, 2020, just like the pandemic-related closures that affected performance of loans for leisure and commercial properties began, there was $3.72 trillion in commercial and multifamily debt outstanding, with the multifamily segment responsible for $1.6 trillion.

“The growth in the age of the pandemic in the amount of outstanding commercial and multifamily mortgage debt continued in the first quarter, but the growth was not evenly distributed,” said Jamie Woodwell, Vice President of Commercial Real Estate Research at the MBA, in a press release. increased their holdings of commercial and multifamily mortgages in the quarter, but nearly two-thirds of the overall growth came from multifamily properties, with 80% of that multifamily growth coming from federally backed agencies and asset-backed securities. government-sponsored business mortgages and portfolios.”

At the end of the first quarter, banks held $1.49 trillion in commercial and multifamily mortgages, or 38% of total outstandings. This is a slight increase from $1.48 trillion (38%) as of December 31, 2020 and $1.4 trillion (39%) as of March 31, 2020.

But when it comes to outstanding multifamily debt alone, agency/GSE investors hold the largest share, 50% at $861 billion. This total also makes them the second largest group of investors.

In the fourth quarter, the agency/GSE sector held $838 billion in multifamily debt, while at the end of the first quarter of 2020 they held $752 billion.

But GSE’s investment in multi-family mortgages going forward could be stifled by regulatory ceilings limit purchases of these loans.

Life insurers held $588 billion as of March 31, down from $587 billion in the fourth quarter and $572 billion in the first quarter of 2020. Meanwhile, securitizers held $540 billion in outstanding debt in the first quarter. , compared to $533 billion in the fourth quarter. and $516 billion a year ago.

Even with quarterly and annual growth and the continued reopening of the US economy, investors are likely to reassess the situation when it comes to providing new financing.

“As the uncertainty related to the COVID-19 pandemic decreases, lenders will have greater clarity about different properties and property types and will be in a better position to make new loans,” Woodwell said.

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