U.S. commercial mortgage debt hits $3.8 trillion in third quarter
Total commercial/multifamily debt outstanding reached $3.82 trillion at the end of the third quarter. Multifamily mortgage debt alone rose $31.0 billion (1.9%) to $1.6 trillion from the second quarter of 2020.
“The amount of mortgage debt secured by commercial and multifamily properties increased for the 33rd consecutive quarter,” said Jamie Woodwell, MBA vice president for commercial real estate research. “Despite a significant decline in acquisition financing over the past two quarters, loan refinancings, particularly for FHA, Fannie Mae, Freddie Mac and bank balance sheets, have helped lift total mortgage balances. Uncertainty Persistent on the long-term impacts of the pandemic is likely to weigh on new funding in the coming quarters, however, the positive news on vaccines reflects a light at the end of the tunnel regarding the pandemic.
The four largest groups of investors are: banks and savings; portfolios of federal agencies and government-sponsored enterprises (GSEs) and mortgage-backed securities (MBS); life insurance companies; and issuance of commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset-backed securities (ABS).
Commercial banks continue to hold the largest share (39%) of commercial/multi-family mortgages at $1.5 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multi-family mortgages (21%) at $798 billion. Life insurance companies hold $577 billion (15%), and issues of CMBS, CDOs and other ABS hold $529 billion (14%). Many life insurance companies, banks and GSEs buy and hold issues of CMBS, CDOs and other ABS. These loans appear in the report under the category “CMBS, CDOs and other ABS”.
MBA analysis summarizes the loan portfolios or, if the loans are securitized, the form of collateral. For example, many life insurance companies invest both in whole loans for which they hold the mortgage certificate (and which appear in these data under the heading Life insurance companies) and in CMBS, CDOs and other ABS whose security issuers and trustees hold the certificate (and which appear here under CMBS, CDOs and other ABS issues).
OUTSTANDING MULTI-FAMILY MORTGAGE DEBT
Looking at multifamily mortgages alone in Q3 2020, agency and GSE portfolios and MBS held the largest share of total multifamily debt outstanding at $798 billion (48%), followed banks and savings with $478 billion (29%), life insurance corporations with $168 billion (10%), state and local governments with $108 billion (7%), and emissions CMBS, CDOs and other ABS holding $52 billion (3%). Non-farm unincorporated businesses hold $20 billion (1%).
CHANGE IN OUTSTANDING COMMERCIAL/MULTI-FAMILY MORTGAGE DEBT
In the third quarter, the agency and GSE portfolios and MBS saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgages – an increase of $23.2 billion (3.0% ). Commercial banks increased their holdings by $12.1 billion (0.8%), issuance of CMBS, CDOs and other ABS increased their holdings by $10.6 billion (2.1%) and REITs increased their holdings by $4.9 billion (5.6%).
In percentage terms, REITs saw the largest increase – 5.6% – in their holdings of commercial/multi-family mortgages. Conversely, the federal government saw its holdings decrease by 2.0%.
CHANGE IN OUTSTANDING MULTI-FAMILY MORTGAGE DEBT
The $31.0 billion increase in outstanding multifamily mortgage debt from the second quarter of 2020 represents an increase of 1.9%. In dollar terms, portfolios of agencies and GSEs and MBS saw the largest gain – $23.2 billion (3.0%) – in their holdings of multifamily mortgage debt. Commercial banks increased their holdings by $4.4 billion (0.9%), and state and local governments increased by $3.2 billion (3.0%). Issues of CMBS, CDOs and other ABS saw the largest decline in their holdings of multifamily mortgage debt, down $835 million (1.6%).