Commercial Mortgage Debt in U.S. Hits Record $4.25 Trillion in Q1


According to the Mortgage Bankers Association’s latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report, U.S. commercial/multifamily mortgage debt outstanding increased by $74.2 billion (1.8 percent) in the first quarter of 2022.

Total commercial/multifamily mortgage debt outstanding rose to $4.25 trillion at the end of the first quarter. Multifamily mortgage debt alone increased $37.4 billion (2.1 percent) to $1.8 trillion from the fourth quarter of 2021.

“Driven by record-high originations for a first quarter, the amount of commercial and multifamily mortgage debt outstanding climbed to a new high at the end of March 2022,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Depositories and life insurance companies were behind the majority of the growth, and multifamily mortgage debt continued to rise at a solid level.”

Woodwell added, “The recent run-up in interest rates and drop in broader equity values will without a doubt affect commercial and multifamily markets in the coming quarters, but the relatively strong market fundamentals for most property classes should serve as a stabilizing force.”

The four 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 percent) of commercial/multifamily mortgages at $1.6 trillion. Agency and GSE portfolios and MBS are the second-largest holders of commercial/multifamily mortgages (21 percent) at $911 billion. Life insurance companies hold $635 billion (15 percent), and CMBS, CDO and other ABS issues hold $612 billion (14 percent). 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. 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).

MULTIFAMILY MORTGAGE DEBT OUTSTANDING

Looking solely at multifamily mortgages in the first quarter of 2022, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $911 billion (49 percent), followed by banks and thrifts with $529 billion (29 percent), life insurance companies with $183 billion (10 percent), state and local government with $106 billion (6 percent), and CMBS, CDO and other ABS issues holding $72 billion (4 percent).

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the first quarter, commercial banks saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $37.7 billion (2.4 percent). Life insurance companies increased their holdings by $14.9 billion (2.4 percent), agency GSE portfolios and MBS increased their holdings by $9.5 billion (1.1 percent), and REITs increased their holdings by $9.3 billion (7.3 percent).

In percentage terms, REITs saw the largest increase – 7.3 percent – in their holdings of commercial/multifamily mortgages. Conversely, private pension funds saw their holdings decrease 7.8 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $37.4 billion increase in multifamily mortgage debt outstanding from the fourth quarter of 2021 represents a quarterly gain of 2.1 percent. In dollar terms, commercial banks saw the largest gain – $16.5 billion (3.2 percent) – in their holdings of multifamily mortgage debt. Agency and GSE portfolios and MBS increased their holdings by $9.5 billion (1.1 percent), and CMBS, CDO and other ABS issues increased by $7.7 billion (12.0 percent).

CMBS, CDO and other ABS issues saw the largest percentage increase in their holdings of multifamily mortgage debt, up 12.0 percent. Private pension funds saw the largest decline in their holdings of multifamily mortgage debt, down 20.1 percent.


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