According to the Mortgage Bankers Association’s latest Commercial and Multifamily Mortgage Debt Outstanding quarterly report, the level of commercial/multifamily mortgage debt outstanding increased by $70.0 billion (1.6 percent) in the third quarter of 2022.
Total commercial/multifamily mortgage debt outstanding rose to $4.45 trillion at the end of the third quarter. Multifamily mortgage debt alone increased $36.1 billion (1.9 percent) to $1.93 trillion from the second quarter of 2022.
“The amount of commercial and multifamily mortgage debt outstanding increased during the third quarter, driven almost entirely by a large increase in the portfolio holdings of banks and other depositories,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “The increase in bank holdings was the largest quarterly increase of any individual capital source in the history of MBA’s series. For most other capital sources, their holdings of commercial and multifamily mortgages grew at a slower rate than during the second quarter of 2022.”
Woodwell added, “The results generally match those of MBA’s Quarterly Originations Index, which showed third-quarter 2022 originations down 13 percent on a quarterly basis, with depositories the sole major capital source to see an increase.”
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 $1.7 trillion. Agency and GSE portfolios and MBS are the second-largest holders of commercial/multifamily mortgages (21 percent) at $926 billion. Life insurance companies hold $655 billion (15 percent), and CMBS, CDO and other ABS issues hold $610 billion (14 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 third quarter of 2022, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $926 billion (48 percent), followed by banks and thrifts with $584 billion (30 percent), life insurance companies with $189 billion (10 percent), state and local government with $111 billion (6 percent), and CMBS, CDO and other ABS issues holding $68 billion (4 percent).
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING
In the third quarter, commercial banks saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $55.9 billion (3.4 percent). Agency and GSE portfolios and MBS increased their holdings by $7.5 billion (0.8 percent), life insurance companies increased their holdings by $7.0 billion (1.1 percent), and state and local governments increased their holdings by $1.0 billion (0.8 percent).
In percentage terms, nonfinancial corporate business saw the largest increase – 3.6 percent – in their holdings of commercial/multifamily mortgages. Conversely, CMBS, CDO and other ABS issues saw their holdings decrease 0.5 percent.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING
The $36.1 billion increase in multifamily mortgage debt outstanding from the second quarter of 2022 represents a quarterly gain of 1.9 percent. In dollar terms, commercial banks saw the largest gain – $26.6 billion (4.8 percent) – in their holdings of multifamily mortgage debt. Agency and GSE portfolios and MBS increased their holdings by $7.5 billion (0.8 percent), and life insurance companies increased by $2.0 billion (1.1 percent).
Banks and thrifts saw the largest percentage increase in their holdings of multifamily mortgage debt, up 4.8 percent. Private pension funds saw the largest decline in their holdings of multifamily mortgage debt at 33.7 percent.