Commercial and Multifamily Mortgage Debt Outstanding Increases Modestly in Q2

On Thursday, the Mortgage Bankers Association (MBA) released the results of its latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report. The level of commercial/multifamily mortgage debt outstanding increased $31.4 billion, or 0.7%, in Q2.

Total commercial/multifamily mortgage debt outstanding rose to $4.69 trillion at the end of Q2. Multifamily mortgage debt alone increased $19.4 billion, or 0.9%, to $2.09 trillion.

MBA said commercial banks continue to hold the largest share, 38% of commercial/multifamily mortgages, at $1.8 trillion. Agency and GSE portfolios and MBS are the second-largest holders of commercial/multifamily mortgages (22%) with $1.02 trillion. Life insurance companies hold $735 billion (16%). CMBS, CDO, and another other ABS issues hold $609 billion, or 13%. (MBA notes that 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.)

Adding background and analysis to the report, MBA Head of Commercial Real Estate Research Jamie Woodwell said:

“Commercial mortgage debt outstanding grew at a modest pace in the second quarter. Every major capital source increased its holdings of mortgages backed by income-producing properties, but the growth was mixed, with life insurance companies increasing their holdings by 1.8% and banks increasing their holdings by 0.2%.

“With fewer loans paying off, CRE mortgage balances have continued to grow in recent quarters despite a marked fall-off in the volume of loans being made. We anticipate that long-term interest rates, which are significantly lower than a year ago, will help increase origination activity in coming quarters—boosting both new loans coming onto the books and the payoff of existing ones.”