U.S. commercial mortgage debt hits record $4.25 trillion in first quarter
According to the Mortgage Bankers Association’s latest Quarterly Commercial/Multifamily Mortgage Debt Outstanding Report, commercial/multifamily mortgage debt outstanding in the United States increased by $74.2 billion (1.8% ) in the first quarter of 2022.
Total commercial/multifamily mortgage debt outstanding reached $4.25 trillion at the end of the first quarter. Multifamily mortgage debt alone rose $37.4 billion (2.1%) to $1.8 trillion from the fourth quarter of 2021.
“Thanks to record first-quarter mounts, outstanding commercial and multifamily mortgage debt reached a new high at the end of March 2022,” said Jamie Woodwell, vice president of mortgage research. MBA commercial real estate. “Custodians and life insurance companies drove most of the growth, and multifamily mortgage debt continued to rise at a solid level.”
Woodwell added: “The recent rise in interest rates and the decline in broader equity values will no doubt affect the commercial and multi-family markets over the coming quarters, but the relatively strong market fundamentals for most asset classes properties should serve as a stabilizing force.
The four largest groups of investors are: banks and savings; portfolios of federal agencies and government-sponsored enterprises (GSEs) and mortgage-backed securities (MBS); life insurance companies; and issuance of commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset-backed securities (ABS).
Commercial banks continue to hold the largest share (38%) of commercial/multi-family mortgages at $1.6 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multi-family mortgages (21%) at $911 billion. Life insurance companies hold $635 billion (15%), and CMBS, CDOs and other ABS issues hold $612 billion (14%). Many life insurance companies, banks and GSEs buy and hold issues of CMBS, CDOs and other ABS. These loans appear in the report under the category “CMBS, CDOs and other ABS”.
MBA analysis summarizes the loan portfolios or, if the loans are securitized, the form of collateral. For example, many life insurance companies invest both in whole loans for which they hold the mortgage certificate (and which appear in these data under the heading Life insurance companies) and in CMBS, CDOs and other ABS whose security issuers and trustees hold the certificate (and which appear here under CMBS, CDOs and other ABS issues).
OUTSTANDING MULTI-FAMILY MORTGAGE DEBT
Looking at multifamily mortgages alone in Q1 2022, agency and GSE portfolios and MBS held the largest share of total multifamily debt outstanding at $911 billion (49%), followed banks and savings with $529 billion (29%), life insurance corporations with $183 billion (10%), state and local governments with $106 billion (6%), and emissions CMBS, CDOs and other ABS holding $72 billion (4%).
CHANGE IN OUTSTANDING COMMERCIAL/MULTI-FAMILY MORTGAGE DEBT
In the first quarter, commercial banks recorded the largest gains in dollar terms in their holdings of commercial/multifamily mortgages – an increase of $37.7 billion (2.4%). Life insurance companies increased their holdings by $14.9 billion (2.4%), GSE agency portfolios and MBS increased their holdings by $9.5 billion (1.1%) , and REITs increased their holdings by $9.3 billion (7.3%).
In percentage terms, REITs saw the largest increase – 7.3% – in their holdings of commercial/multi-family mortgages. Conversely, private pension funds saw their assets decrease by 7.8%.
CHANGE IN OUTSTANDING MULTI-FAMILY MORTGAGE DEBT
The $37.4 billion increase in outstanding multifamily mortgage debt from the fourth quarter of 2021 represents a quarterly gain of 2.1%. In dollar terms, commercial banks recorded the largest gain – $16.5 billion (3.2%) – in their holdings of multifamily mortgages. Agency and GSE portfolios and MBS increased their holdings by $9.5 billion (1.1%), and issuance of CMBS, CDOs and other ABS increased by $7.7 billion. dollars (12.0%).
Issues of CMBS, CDOs and other ABS saw the largest percentage increase in their holdings of multifamily mortgage debt, up 12.0%. Private pension funds saw the largest decline in their holdings of multifamily mortgage debt, down 20.1%.