Commercial/Multifamily Mortgage Debt Rose In Q1, But Delinquencies Declined

Commercial and multifamily mortgage debt outstanding hit a new high in the first quarter as delinquency rates continued to decline.

According to the Mortgage Bankers Association (MBA), total commercial/multifamily mortgage debt outstanding increased by $11.1 billion in the first quarter – a 0.4% increase over the fourth quarter of 2013 – to reach $2.56 trillion, as three of the four major investor groups increased their holdings.

Multifamily mortgage debt outstanding alone rose to $913 billion – an increase of $8.7 billion, or 1%, compared to the fourth quarter of 2013.

So who's holding the debt? Jamie Woodwell, vice president of commercial real estate research for the MBA, reports that "[commercial] banks led the charge, followed by life insurance companies and real estate investment trusts, while the commercial mortgage-backed securities (CMBS) market reverted to a net decline in the balance of outstanding mortgages.’

‘Mortgage debt backed by apartment properties continued to grow at a faster pace than other property types, particularly on bank balance sheets,’ Woodwell adds.

Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $914 billion, or 36% of the total, according to the MBA.

CMBS, collateralized debt obligations and other asset-backed securities issues are the second largest holders of commercial/multifamily mortgages – holding $554 billion, or 22% – while agency portfolios and MBS hold a combined $391 billion, or 15%, and life insurance companies hold $342 billion, or 13%.

Meanwhile, delinquency rates for commercial and multifamily mortgage loans continued to decline.

During the first quarter, the 30-plus-day delinquency rate for loans held in CMBS decreased 0.69 percentage points to 6.16%.

The 60-plus-day delinquency rate for multifamily loans held or insured by Fannie Mae was unchanged at 0.10%.

The 60-plus-day delinquency rate for multifamily loans held or insured by Freddie Mac decreased 0.05 percentage points to 0.04%.

The 60-plus day delinquency rate for commercial and multifamily mortgages held in life company portfolios were unchanged at 0.05%.

The 90-plus-day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.13 percentage points to 1.57%.

‘The last two quarters marked the largest percentage point declines in CMBS delinquency rates ever,’ says Woodwell. ‘We also see continued improvement in the performance of commercial mortgages held by banks and very low delinquencies in loans held by life insurance companies and the GSEs. With property incomes and values rising, loan performance should continue to benefit.’


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