According to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report, the level of commercial/multifamily mortgage debt outstanding increased by $37.7 billion (0.8%) in the second quarter of 2023.
Total commercial/multifamily mortgage debt outstanding rose to $4.6 trillion at the end of the second quarter. Multifamily mortgage debt alone increased $26.4 billion (1.3%) to $2.03 trillion from the first quarter.
“Commercial and multifamily mortgage originations are down by more than half from a year ago, and this lack of new demand means that fewer loans are being paid off,” says Jamie Woodwell, MBA head of commercial real estate research. “This in turn is helping to maintain, and in some cases even grow, the amount of credit outstanding.”
The largest investor groups are: banks and thrifts; federal agency and government sponsored enterprise (GSE) portfolios and mortgage-backed securities (MBS); life insurance companies; and commercial mortgage-backed securities (CMBS), collateralized debt obligation (CDO) and other asset-backed securities (ABS) issues.
Commercial banks continue to hold the largest share (38%) of commercial/multifamily mortgages at $1.8 trillion. Agency and GSE portfolios and MBS are the second-largest holders of commercial/multifamily mortgages (21%) at $971 billion. Life insurance companies hold $692 billion (15%), and CMBS, CDO and other ABS issues hold $593 billion (13%). Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the report in the “CMBS, CDO and other ABS” category.
MBA’s analysis summarizes the holdings of loans or, if the loans are securitized, the form of the security.
Looking solely at multifamily mortgages in the second quarter of 2023, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $971 billion (48%), followed by banks and thrifts with $600 billion (30%), life insurance companies with $219 billion (11%), state and local government with $114 billion (6%) and CMBS, CDO and other ABS issues holding $65 billion (3%).
In the second quarter, banks and thrifts saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $13.9 billion (0.8%). Agency and GSE portfolios and MBS increased their holdings by $13.4 billion (1.4 %), life insurance companies increased their holdings by $12.0 billion (1.8%), and nonfinancial corporate business increased their holdings by $1.5 billion (5.3%).
In percentage terms, state and local government retirement funds saw the largest increase – 10.3% – in their holdings of commercial/multifamily mortgages. Conversely, finance companies saw their holdings decrease 2.2%.
The $26.4 billion increase in multifamily mortgage debt outstanding from the first quarter of 2023 represents a quarterly gain of 1.3%. In dollar terms, agency and GSE portfolios and MBS issues saw the largest gain – $13.4 billion (1.4%) – in their holdings of multifamily mortgage debt. Bank and thrifts increased their holdings by $7.2 billion (1.2%), and life insurance companies increased by $4.3 billion (2%).
State and local government retirement funds saw the largest percentage increase in their holdings of multifamily mortgage debt, up 10.3%. CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt at 0.5%.
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