WASHINGTON, D.C. (September 19, 2023) — The level of commercial/multifamily mortgage debt outstanding increased by $37.7 billion (0.8 percent) in the second quarter of 2023, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report.
Total commercial/multifamily mortgage debt outstanding rose to $4.60 trillion at the end of the second quarter. Multifamily mortgage debt alone increased $26.4 billion (1.3 percent) to $2.03 trillion from the first quarter of 2023.
“Commercial and multifamily mortgage debt outstanding rose again in the second quarter, driven by increases in the mortgage holdings of life companies, the GSEs, banks, and other depositories,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Commercial and multifamily mortgage originations are down by more than half from a year ago, and this lack of new demand means that fewer loans are being paid off. This in turn is helping to maintain, and in some cases even grow, the amount of credit outstanding.”
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 $1.8 trillion. Agency and GSE portfolios and MBS are the second-largest holders of commercial/multifamily mortgages (21 percent) at $971 billion. Life insurance companies hold $692 billion (15 percent), and CMBS, CDO and other ABS issues hold $593 billion (13 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 second quarter of 2023, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $971 billion (48 percent), followed by banks and thrifts with $600 billion (30 percent), life insurance companies with $219 billion (11 percent), state and local government with $114 billion (6 percent), and CMBS, CDO and other ABS issues holding $65 billion (3 percent).
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING
In the second quarter, banks and thrifts saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $13.9 billion (0.8 percent). Agency and GSE portfolios and MBS increased their holdings by $13.4 billion (1.4 percent), life insurance companies increased their holdings by $12.0 billion (1.8 percent), and nonfinancial corporate business increased their holdings by $1.5 billion (5.3 percent).
In percentage terms, state and local government retirement funds saw the largest increase – 10.3 percent – in their holdings of commercial/multifamily mortgages. Conversely, finance companies saw their holdings decrease 2.2 percent.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING
The $26.4 billion increase in multifamily mortgage debt outstanding from the first quarter of 2023 represents a quarterly gain of 1.3 percent. In dollar terms, agency and GSE portfolios and MBS issues saw the largest gain – $13.4 billion (1.4 percent) – in their holdings of multifamily mortgage debt. Bank and thrifts increased their holdings by $7.2 billion (1.2 percent), and life insurance companies increased by $4.3 billion (2.0 percent).
State and local government retirement funds saw the largest percentage increase in their holdings of multifamily mortgage debt, up 10.3 percent. CMBS, CDO and other ABS issues saw the largest decline in their holdings of multifamily mortgage debt at 0.5 percent.
MBA’s analysis is based on data from the Federal Reserve Board’s Financial Accounts of the United States, the Federal Deposit Insurance Corporation’s Quarterly Banking Profile, and data from Trepp LLC. More information on this data series is contained in Appendix A.