WASHINGTON, D.C. (September 20, 2022) — The level of commercial/multifamily mortgage debt outstanding increased by $99.5 billion (2.3 percent) in the second quarter of 2022, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report.

Total commercial/multifamily mortgage debt outstanding rose to $4.38 trillion at the end of the second quarter. Multifamily mortgage debt alone increased $35.7 billion (1.9 percent) to $1.9 trillion from the first quarter of 2022.

“The $99.5 billion increase in commercial and multifamily mortgage debt outstanding in the second quarter was the second largest quarterly rise since the inception of MBA’s data series in 2007,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The increase in holdings by depositories was the largest on record. The data match the fact that the first half of 2022 saw more commercial and multifamily borrowing and lending than any previous January through June period." 

Added Woodwell, “Given a variety of changes in space, equity, and debt markets since the start of the year, we expect the pace to slow considerably in coming quarters.”

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 $919 billion. Life insurance companies hold $648 billion (15 percent), and CMBS, CDO and other ABS issues hold $613 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 second quarter of 2022, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $919 billion (49 percent), followed by banks and thrifts with $558 billion (30 percent), life insurance companies with $187 billion (10 percent), state and local government with $105 billion (6 percent), and CMBS, CDO and other ABS issues holding $68 billion (4 percent). 

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the second quarter, commercial banks saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $51.9 billion (3.2 percent). REITs increased their holdings by $22.3 billion (14.4 percent), life insurance companies increased their holdings by $13.1 billion (2.1 percent), and agency and GSE portfolios and MBS increased their holdings by $8.0 billion (0.9 percent).

In percentage terms, REITs saw the largest increase – 14.4 percent – in their holdings of commercial/multifamily mortgages. Conversely, state and local government retirement funds saw their holdings decrease 3.2 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $35.7 billion increase in multifamily mortgage debt outstanding from the first quarter of 2022 represents a quarterly gain of 1.9 percent. In dollar terms, commercial banks saw the largest gain – $28.5 billion (5.4 percent) – in their holdings of multifamily mortgage debt. Agency and GSE portfolios and MBS increased their holdings by $8.0 billion (0.9 percent), and life insurance companies increased by $3.9 billion (2.1 percent).

Bank and thrifts saw the largest percentage increase in their holdings of multifamily mortgage debt, up 5.4 percent. Private pension funds saw the largest decline in their holdings of multifamily mortgage debt at 25.2 percent.

MBA’s analysis is based on data from the Federal Reserve Board’s Financial Accounts of the United States, the Federal Deposit Insurance Corporation’s Quarterly Banking Profile, and data from Trepp LLC. More information on this data series is contained in Appendix A.

MBA’s complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded here: www.mba.org/news-and-research/research-and-economics/commercial-multifamily-research/commercial-multifamily-mortgage-debt-outstanding-x44535.