Commercial/Multifamily Mortgage Debt Grows

Washington, DC, Sept. 23, 2008--The level of commercial/multifamily mortgage debt outstanding grew by 1.5 percent in the second quarter, to $3.44 trillion, according to the Mortgage Bankers Association's (MBA) analysis of the Federal Reserve Board Flow of Funds data.

That figure was an increase of $51.3 billion from the first quarter 2008.  Multifamily mortgage debt outstanding grew to $875 billion, an increase of $16.3 billion or 1.9 percent from first quarter.

"Despite the persistent credit crunch, investors increased their holdings of commercial/multifamily mortgages in the second quarter," said Jamie Woodwell, MBA's vice president of commercial real estate research.

"The only major investor group to see a decline in their holdings was the commercial mortgage-backed securities (CMBS) market, which has been most profoundly affected by the credit crunch.  Other investor groups including commercial banks, life insurance companies, thrifts and the government-sponsored enterprises (GSEs) increased their holdings over the quarter."

Commercial banks continue to hold the largest share, $1.46 trillion, or 43 percent of the total.  Many of the commercial mortgage loans reported by commercial banks however, are actually "commercial and industrial" loans to which a piece of commercial property has been pledged as collateral.

CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $762 billion, or 22 percent of the total.  Life insurance companies hold $313 billion, or 9 percent of the total, and savings institutions hold $230 billion, or 7 percent of the total.

The GSEs and agency - and GSE - backed mortgage pools (including Fannie Mae, Freddie Mac and Ginnie Mae) hold $146 billion in multifamily loans for a total share of 9 percent.

In the second quarter of 2008, commercial banks saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $35 billion, or 3 percent, which represents 69 percent of the total $51 billion increase.

The $16 billion increase in multifamily mortgage debt outstanding between the first quarter and second quarter of 2008 represents a 2 percent increase.