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Commercial, Multifamily Debt Keeps Growing at Record Pace

Commercial and multifamily mortgage debt outstanding increased by $60.8 billion, 2.9%, to $2.17 trillion from the first quarter to the second quarter, the Mortgage Bankers Association reports.

Multifamily debt alone grew by $14.9 billion, or 2.7%, to $567 billion, during this period, according to the MBA.

Doug Duncan, chief economist, MBA, said, "The second quarter marks the greatest single-quarter increase in the amount of commercial/multifamily debt. It also marks the greatest single-quarter increase in the amount of commercial/multifamily debt. With moderate economic growth, low delinquencies and moderate interest rate increases, the trend is likely to continue."

Commercial banks hold the largest share of these mortgages, at $919 billion, or 42% of the total, the MBA said. (This also includes the category of "commercial and industrial" loans, which have commercial and multifamily property as collateral.)

Commercial mortgage-backed securities issuers hold $392 billion (18%) of the total, followed by life insurance companies, which hold $250 billion (11.5%) of the debt, and savings institutions, which hold $176 billion of the total.

Government-sponsored enterprises hold $116 billion of the debt in the form of multifamily mortgages that back the securities they issue and also hold $49 billion of the debt in their own portfolios, for a total share of 7.6%. In dollar terms, commercial banks added on an additional $26 billion, 2.9%, to their mortgage debt holdings, the MBA reports.

This represents 43% of the total $60.8 billion increase for the period.

CMBS issuers raised their holdings of mortgage debt by $18 billion, 4.9%, accounting for 30% of the increase in the debt. Life insurance companies hiked up their holdings by $6.8 billion, or 2.8%.

Retirement funds affiliated with state and local governments saw their commercial/multifamily mortgage debt holdings rise 7.4%, the highest in percentage terms, while "non-farm, non-corporate businesses" saw the highest drop-off in percentage terms at 12.3%.

In terms of multifamily mortgage debt alone, the GSEs hold the biggest share, with $116 billion of this in "federally related mortgage pools" and $49 billion in their own portfolios - accounting for 29.1% of the total multifamily debt outstanding.

Commercial banks are next, holding $111 billion, 19.5% of the total, followed by savings institutions with $84 billion, 14.8%, and CMBS issuers with $70 billion, or 12.4% of the total. Between the first and second quarters of the year, multifamily debt outstanding grew by $14.9 billion, or 2.7%, the MBA said. Multifamily-backed mortgage debt in "federally related mortgage pools" grew by $4.4 billion, or 4%, representing 29.7% of the total increase.

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