Commercial mortgage debt up on higher valuations, low rates: MBA

Register now

Commercial and multifamily mortgage debt outstanding grew by 1.6% during the second quarter, benefiting from improved property values and low interest rates, according to the Mortgage Bankers Association.

There was a $52.3 billion increase in commercial and multifamily debt outstanding during the second quarter, bringing the total to $3.27 trillion. The multifamily segment alone rose above $1.3 trillion for the first time, with an increase of $20 billion during the period.

"The balance of mortgage debt on commercial and multifamily properties grew faster during the first half of 2018 than during any other first half since 2007," Jamie Woodwell, MBA vice president of commercial real estate research, said in a press release. "Strong property fundamentals and values, coupled with still-low mortgage rates and strong loan performance, are all supporting the market."

In the first quarter, total commercial and multifamily debt increased by $44.3 billion; multifamily debt alone rose by $19.3 billion.

Banks had the largest increase in commercial and multifamily mortgage debt outstanding during the quarter, $23.9 billion. The GSEs — Fannie Mae and Freddie Mac — along with federal agencies' holdings increased by $14.5 billion, all of it in the multifamily segment. Life insurers added $10.6 billion, while securitizers added $5.7 billion.

Banks added $7.9 billion of multifamily debt, while life insurers added $1.7 billion. Securitizers had a $430 million drop in multifamily holdings. State and local government agencies had a $1.7 billion decline in the amount of multifamily debt they held during the quarter.

Commercial banks hold $1.3 trillion of commercial and multifamily mortgage debt, followed by the GSEs and federal agencies at $631 billion. Life insurers hold $486 billion, while securitizers hold $452 billion. The remaining $450 billion is held by others, including state and local government retirement funds and agencies.

For reprint and licensing requests for this article, click here.
Commercial mortgages Multifamily CMBS CRE GSEs Mortgage Bankers Association