The level of commercial/multifamily mortgage debt outstanding during the final three months of 2021 was $287 billion (7.4%) higher than at the end of 2020, according to the Mortgage Bankers Association‘s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report.
MBA’s report found that total mortgage debt outstanding rose by 2.9% ($116 billion) in fourth-quarter 2021. Multifamily mortgage debt grew by $42.1 billion (2.4%) to $1.81 trillion during the fourth quarter, and by $121.9 billion (7.2%) for the entire year.
“Strong borrowing and lending backed by commercial and multifamily properties drove the level of mortgage debt outstanding to a new high at the end of 2021,” says Jamie Woodwell, MBA’s vice president of commercial real estate research. “The last three months of the year marked the largest quarterly increase in mortgage debt outstanding on record, as every major capital source increased their holdings. The 7.4 percent annual increase in outstanding debt compares to a 19.5 percent increase in underlying property values.”
The four major investor groups are: bank and thrift; commercial mortgage-backed securities (CMBS), collateralized debt obligation (CDO) and other asset backed securities (ABS) issues; federal agency and government sponsored enterprise (GSE) portfolios and mortgage-backed securities (MBS); and life insurance companies.
MBA’s analysis summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under Life Insurance Companies), and in CMBS, CDOs and other ABS for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues).
Commercial banks continue to hold the largest share (38%) of commercial/multifamily mortgages at $1.6 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages at $901 billion (22% of the total). Life insurance companies hold $618 billion (15%), and CMBS, CDO and other ABS issues hold $609 billion (15%).
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total debt outstanding at $901 billion (50% of the total), followed by commercial banks with $513 billion (28%), life insurance companies with $179 billion (10%), state and local governments with $106 billion (6%), and CMBS, CDO and other ABS issues with $62 billion (3%).
In the fourth quarter of 2021, CMBS, CDO and other ABS issues saw the largest rise in dollar terms in their holdings of commercial/multifamily mortgage debt, with an increase of $45.1 billion (8%). Commercial banks increased their holdings by $35.8 billion (2.3%), Agency and GSE portfolios and MBS increased their holdings by $16.0 billion (1.8%), and life insurance companies increased their holdings by $8.7 billion (1.4%).
In percentage terms, CMBS, CDO and other ABS issues saw the largest increase at 8% in their holdings of commercial/multifamily mortgages.
The $42.1 billion rise in multifamily mortgage debt outstanding between the third and fourth quarters of 2021 represented a 2.4% increase. In dollar terms, commercial banks saw the largest increase, at $16.5 billion (3.3%), in their holdings of multifamily mortgage debt. Agency and GSE portfolios and MBS increased their holdings of multifamily mortgage debt by $16.0 billion (1.8%). CMBS, CDO and other ABS increased holdings by 12.8% to $7.1 billion. Private pension funds saw the largest decline (16.8%) in their holdings, by $65 million.
In percentage terms, CMBS, CDO, and other ABS recorded the largest increase in holdings of multifamily mortgages (12.8%), and private pension funds saw the biggest decrease (16.8%).
Between December 2020 and December 2021, commercial banks saw the largest gain in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $87 billion (5.9%). CMBS, CDO and other ABS issues increased their holdings of commercial/multifamily mortgages by $76.0 billion (14.2%).
In percentage terms, REITs saw the largest increase (23.1%) in their holdings of commercial/multifamily mortgages.
The $121.9 billion rise in multifamily mortgage debt outstanding during 2021 represents a 7.2% increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt at 7.6% ($63.3 billion). Federal government saw the largest decrease in their holdings, down $260 million (2.3%).
In percentage terms, REITs recorded the largest increase in their holdings of multifamily mortgages, 53.2%, while private pension funds saw the largest decrease, at 44.6%.
Read the full report here.