WASHINGTON, D.C. – March 17, 2015 – (RealEstateRama) — Total commercial/multifamily debt outstanding stood at $2.64 trillion in the fourth quarter of 2014, an increase of $48.9 billion, or 1.9 percent, over the third quarter, according to data collected by the Mortgage Bankers Association (MBA). Commercial/multifamily debt outstanding increased at the highest rate since the fourth quarter of 2007, as three of the four major investor groups increased their holdings in the fourth quarter. On a year-over-year basis, the amount of mortgage debt outstanding at the end of 2014 was $119.5 billion higher than at the end of 2013, an increase of 4.7 percent.
Multifamily mortgage debt outstanding rose to $964 billion, an increase of $23.7 billion, or 2.5 percent, from the third quarter and $60.0 billion, or 6.6 percent, from the fourth quarter of 2013.
“Led by growth in loans on multifamily properties, banks, the GSEs and life insurance companies all increased their books of business by more than five percent during the year and by more than two percent during the fourth quarter alone,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Rising property values, improving fundamentals and low interest rates all contributed to the growth.”
The 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 commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset backed securities (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 of commercial/multifamily mortgages, with $967 billion, or 37 percent of the total.
CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $533 billion, or 20 percent of the total. Agency and GSE portfolios and MBS hold $412 billion, or 16 percent of the total, and life insurance companies hold $359 billion, or 14 percent of the total. Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the CMBS, CDO and other ABS categories.
MULTIFAMILY MORTGAGE DEBT OUTSTANDING
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $412 billion, or 43 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $297 billion, or 31 percent of the total. State and local governments hold $84 billion, or 9 percent of the total; CMBS, CDO and other ABS issues hold $74 billion, or 8 percent of the total; life insurance companies hold $57 billion, or 6 percent of the total; and the non-farm non-corporate business holds $16 billion, or 2 percent of the total.
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING
In the fourth quarter of 2014, bank and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $23 billion, or 2.5 percent. Agency and GSE portfolios and MBS increased their holdings of commercial/multifamily mortgages by $13 billion, or 3.1 percent. CMBS, CDO and other ABS issues saw the largest decrease of $3 billion or 0.5 percent.
In percentage terms, REITs recorded the largest increase in holdings of commercial/multifamily mortgages, at 16.5 percent. Private pension funds saw the biggest decrease, at 6.7 percent.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING
The $23.7 billion increase in multifamily mortgage debt outstanding between the third quarter and fourth quarter of 2014 represents a 2.5 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $12.5 billion, or 3.1 percent. Bank and thrifts increased their holdings of multifamily mortgage debt by $8.5 billion, or 2.9 percent. Life insurance companies increased by $1.2 billion, or 2.2 percent. Federal government saw the biggest decrease in their holdings of multifamily mortgage debt, by $190 million, or 1.4 percent.
In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages, at 11.2 percent. Private pension funds saw the biggest decrease, at 2.2 percent.
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2014
Between December 2013 and December 2014, commercial banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $70 billion, or 7.8 percent. CMBS, CDO and other ABS issues decreased their holdings of commercial/multifamily mortgages by $6 billion, or 1.1 percent.
In percentage terms, state and local government retirement funds saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 37.4 percent. Nonfinancial corporate business saw the largest decrease, at 3.2 percent.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2014
The $60 billion increase in multifamily mortgage debt outstanding during 2014 represents a 6.6 percent increase. In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt – an increase of $34.5 billion, or 13.1 percent. CMBS, CDO and other ABS issues saw a decrease of $1.2 billion in their holdings, or 1.6 percent.
In percentage terms, REITs recorded the largest increase in their holdings of multifamily mortgages, 61.2 percent, while private pension funds saw the largest decrease, 10.4 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 Wells Fargo Securities. More information on this data series is contained in Appendix A.
To download the full Fourth Quarter 2014 Commercial/Multifamily Debt Outstanding, please click here.
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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, REITs, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s website: www.mba.org.
CONTACT
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