The level of commercial/multifamily mortgage debt outstanding decreased in the third quarter to $3.2 trillion, according to the Mortgage Bankers Association's (MBA) analysis of the Federal Reserve Board Flow of Funds data. Declines were driven by drops in construction loans held by banks and thrifts and commercial and multifamily mortgages held in commercial mortgage-backed securities (CMBS).
The $3.2 trillion in commercial/multifamily mortgage debt outstanding was a decrease of $42 billion or 1.3% from the second quarter. Multifamily mortgage debt outstanding increased to $847 billion – an increase of $2.3 billion, or 0.3%, from the second quarter.
‘Borrowers are continuing to pay off and pay down loans at a faster rate than new loans are being taken out,’ says Jamie Woodwell, the MBA's vice president of commercial real estate research. ‘The CMBS market is experiencing the fastest net runoff, followed by commercial banks, which are seeing most of their net declines in construction lending.Â Fannie Mae, Freddie Mac and [the Federal Housing Administration] are growing their multifamily mortgage books of business, and life companies are matching portfolio runoff with new originations.’Â
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 and other asset-backed securities for which the security issuers and trustees hold the note.
SOURCE: Mortgage Bankers Association