WASHINGTON, DC—Commercial and multifamily mortgage debt reached a record high in the third quarter, the Mortgage Bankers Association said Tuesday. The 1.1% increase in outstanding debt brought the total to $2.59 trillion, with multifamily mortgages accounting for more than half the quarterly increase.
“The quarter-over-quarter increase was the highest since 2008, and the rise in multifamily mortgage debt was the highest since 2007,” says Jamie Woodwell, MBA's VP of CRE research. “Strong originations are more than outpacing the low volume of loans maturing this year.”
With 37% of the total, or $944 billion, commercial banks continue to hold the largest share of commercial/multifamily mortgages, MBA says. They also led the way in terms of uptick in dollar volume during Q3, with the $13.7 billion in Q3 originations representing 1.5% of banks' total. It also represented nearly half the $28.6 billion in new debt during the quarter across the four major investor groups. Banks also recorded the largest dollar increase in multifamily debt during Q3: $7.8 billion.
However, the biggest percentage increase during Q3 came via state and local government pension funds, which grew their tally by 19%. These funds also registered the biggest quarterly decline in multifamily mortgage debt holdings at 2%.
Agency and GSE portfolios and MBS increased their holdings of commercial/multifamily mortgages by $7.8 billion, or 2%, while life insurance companies increased their holdings by $5.5 billion, or 1.6%. REITs saw the largest overall decrease at $2.1 billion, or a decrease of 5.4%, although the sector's quarterly percentage increase in multifamily debt was far and away the largest at 58.4%.
After commercial banks, CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $535 billion, 21% of the total. Agency and GSE portfolios and MBS hold $400 billion, or 15% of the total, while life insurance companies hold $351 billion, or 14%.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
