Recession Declines Now ‘Erased’ By Mortgage Debt Outstanding Levels

Posted by Patrick Barnard on March 12, 2014 No Comments
Categories : Commercial Mortgage

As all four major investor groups increased their holdings, the level of commercial/multifamily mortgage debt outstanding increased by $41.2 billion, or by 1.7%, in the fourth quarter of 2013, according to a report by the Mortgage Bankers Association (MBA).

On a year-over-year basis, the amount of mortgage debt outstanding at the end of 2013 was $90.5 billion higher than at the end of 2012 – an increase of 3.7%.

Multifamily mortgage debt outstanding rose to $895 billion – an increase of $11.5 billion, or 1.3%, from the third quarter, and $36.6 billion, or 4.3%, from the fourth quarter of 2012.

"During the fourth quarter, commercial and multifamily mortgage debt outstanding reached a new high, erasing the declines caused by the recession," notes Jamie Woodwell, MBA's vice president of commercial real estate research.

"Over the course of 2013, banks increased their holdings of commercial and multifamily mortgages by seven percent, and their balance of just multifamily mortgages by more than 12 percent," Woodwell continues. "Commercial mortgage-backed securities' holdings increased for the first time since 2007, and life insurance companies, the government-sponsored enterprises (GSEs) and the Federal Housing Administration each increased their holdings (or guarantees) by more than three percent. Simply put, it was a strong year."

The MBA notes that commercial banks continue to hold the largest share of commercial/multifamily mortgages, with $897 billion, or 36% of the total.

Looking solely at multifamily mortgages, agency and GSE portfolios and mortgage-backed securities hold the largest share, with $391 billion, or 44% of the total multifamily debt outstanding.

In the fourth quarter of 2013, bank and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $28 billion, or 3.2%. Finance companies saw the largest decrease, of $2 billion, or 3.5%.  Â

In percentage terms, other insurance (non-life) companies recorded the largest increase in holdings of commercial/multifamily mortgages, at 4.4%. State and local government retirement funds saw the biggest decrease, at 17.8%.

In dollar terms, commercial bank and thrifts saw the largest increase in their holdings of multifamily mortgage debt – an increase of $10.4 billion, or 4.1%. Comparatively, state and local government retirement funds saw the biggest decrease in their holdings of multifamily mortgage debt, by $451 million, or 17.8%.

In percentage terms, commercial banks recorded the largest increase in holdings of multifamily mortgages, at 4.1%. State and local government retirement funds saw the biggest decrease, at 17.8%.

Between December 2012 and December 2013, commercial banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $62 billion, or 7.4%.

In percentage terms, the other (non-life) insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages – an increase of 29.9%, and state and local government retirement funds saw the largest decrease, at 29.7%.

In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt – an increase of $28.7 billion, or 12.2%.

In percentage terms, real estate investment trusts recorded the largest increase in their holdings of multifamily mortgages – 41.1% – while finance companies saw the largest decrease, 29.9%.

The MBA's full report can be found here.

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