The level of commercial/multifamily mortgage debt outstanding decreased in the second quarter to $3.47 trillion, according to the Mortgage Bankers Association (MBA) analysis of the Federal Reserve Board Flow of Funds data.
The $3.47 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was a decrease of $9.9 billion, or 0.3%, from the first quarter of 2009. Multifamily mortgage debt outstanding grew to $914 billion – an increase of $6 billion, or 0.7%, from the first quarter.
‘Commercial/multifamily mortgage debt outstanding fell by 0.3 percent in the second quarter, as the amount of loans paid down and paid off exceeded the amount of new mortgages taken out,’ says Jamie Woodwell, MBA's vice president of Commercial Real Estate Research. ‘Most major investor groups, including the [commercial mortgage-backed securities (CMBS)] market, life insurance companies and banks and thrifts, saw reductions in their holdings of commercial/multifamily mortgages, while Fannie Mae and Freddie Mac increased their holdings of multifamily mortgages.’
The Federal Reserve Flow of Funds data summarizes the holding 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 in CMBS, collateralized debt obligations (CDOs) and other asset-backed securities (ABS) for which the security issuers and trustees hold the note.
Commercial banks continue to hold the largest share of commercial/multifamily mortgages – $1.55 trillion, or 45% of the total.Â 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.Â
An MBA Research PolicyNote found that among the top 10 commercial real estate bank lenders, 48% of their aggregate balance of commercial (i.e., non-multifamily) real estate loans were related to owner-occupied properties.
Since the other loans reported in the analysis are generally income property loans – meaning that the income primarily comes from rents – the commercial bank numbers are not comparable, the MBA notes.
CMBS, CDO and other ABS issuers are the second-largest holders of commercial/multifamily mortgages, holding $714 billion, or 21% of the total. Life insurance companies hold $313 billion, or 9% of the total, and savings institutions hold $195 billion, or 6% of the total.Â
The government-sponsored enterprises (GSEs), agency-backed mortgage pools and GSE-backed mortgage pools, including Fannie Mae, Freddie Mac and Ginnie Mae, hold $195 billion in multifamily loans that support the mortgage-backed securities they issued and an additional $157 billion in ‘whole’ loans in their own portfolios.
This represents a total share of 10% of outstanding commercial/multifamily mortgages.Â
SOURCE: Mortgage Bankers Association