Mortgage Debt Inched Up at the End of Last Year

The total amount of mortgage debt between commercial and multifamily properties was $130 billion at the end of 2023, a 2.8% increase over Q4 2022, according to the Mortgage Bankers Association.

That was a 0.9% increase, or $41.8 billion, for the non-multifamily commercial portion, reaching $4.69 trillion. Multifamily mortgage was up $25.0 billion, or 1.2%, to $2.09 trillion; year over year it grew by $88.5 billion, or 4.4%.

“The amount of commercial mortgage debt outstanding grew in the final quarter of 2023 and for the year as a whole,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, in prepared remarks. “However, the increase was among the slowest paces since the mid-2010s. Every major capital source increased its mortgage holdings during the year. Mortgage originations were down by roughly 50 percent in 2023 compared to 2022, but that meant that few loans were paying off, helping maintain portfolio sizes even in the face of lower inflows.”

The focus on portfolio sizes also suggest the difficulty CRE property owners are having paying off maturing loans. That would seem to agree with other information and data sources and analyses that see increasing difficulty in CRE financing.

The capital sources include bank and thrift institutions ($1.8 trillion or 38% of mortgages); commercial mortgage-backed securities, collateralized debt obligations, and other asset-backed securities ($593 billion or 12.6%); federal agency and government sponsored enterprises ($1.0 trillion, or 21.4%); and life insurance companies ($733 billion, or 15.6%).

“In the fourth quarter of 2023, agency and GSE portfolios and MBS saw the largest rise in dollar terms in their holdings of commercial/multifamily mortgage debt, with an increase of $15.5 billion (1.6 percent),” the MBA wrote about changes in mortgage debt outstanding. “Commercial banks increased their holdings by $14.8 billion (0.8 percent), Life insurance companies increased their holdings by $9.9 billion (1.4 percent), and nonfinancial corporate business increased their holdings by $1.3 billion (1.1 percent). Finance companies saw the largest decline (5.0 percent) in their holdings, by $1.9 billion.”

There are also additional holders of outstanding mortgage debt, all in terms of percentage of the total. They include state and local government (2.9%); non-financial corporate business (2.6%); federal government (2.1%); REITs (2.0%); finance companies (0.8%); nonfarm corporate business (0.7%); other insurance companies (0.7%); private pension funds (0.5%); and state and local government retirement (0.1%).