Commercial And Multifamily Mortgage Debt Outstanding Increased By $324 Billion In Q4 Of 2022

The level of commercial/multifamily mortgage debt outstanding at the end of 2022 was $324 billion (7.7 percent) higher than at the end of 2021, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report.

MBA’s report found that total mortgage debt outstanding rose by 1.7 percent ($77.9 billion) in fourth-quarter 2022. Multifamily mortgage debt grew by $35.6 billion (1.8 percent) to $1.96 trillion during the fourth quarter and by $148.2 billion (8.2 percent) for the entire year.

“Commercial and multifamily mortgage debt outstanding grew at another strong clip in 2022,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “The rate of growth was the second largest since 2007 – just below 2021’s pace. Among capital sources, depositories led the growth, increasing their holdings of commercial and multifamily mortgages by 12 percent. Additionally, growth in multifamily mortgage balances accounted for almost half of the annual increase.”

The four major investor groups are: bank and thrift; commercial mortgage-backed securities (CMBS), collateralized debt obligation (CDO) and other asset backed securities (ABS) issues; federal agency and government sponsored enterprise (GSE) portfolios and mortgage-backed securities (MBS); and life insurance companies.

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).

Commercial banks continue to hold the largest share (39 percent) of commercial/multifamily mortgages at $1.7 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages at $953 billion (21 percent of the total). Life insurance companies hold $666 billion (15 percent), and CMBS, CDO and other ABS issues hold $603 billion (13 percent).

MULTIFAMILY MORTGAGE DEBT OUTSTANDING

Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total debt outstanding at $953 billion (49 percent of the total), followed by commercial banks with $598 billion (31 percent), life insurance companies with $191 billion (10 percent), state and local governments with $112 billion (6 percent), and CMBS, CDO and other ABS issues with $60 billion (3 percent).

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the fourth quarter of 2022, commercial banks saw the largest rise in dollar terms in their holdings of commercial/multifamily mortgage debt, with an increase of $38.5 billion (2.2 percent). Agency and GSE portfolios and MBS increased their holdings by $27.3 billion (2.9 percent), life insurance companies increased their holdings by $10.8 billion (1.6 percent), and REITs increased their holdings by $5.6 billion (3.2 percent). CMBS, CDO and other ABS issues saw the largest decline (1.2 percent) in their holdings by $7.4 billion.

In percentage terms, nonfinancial corporate business saw the largest increase – 3.5 percent – in their holdings of commercial/multifamily mortgages.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $35.6 billion rise in multifamily mortgage debt outstanding between the third and fourth quarters of 2022 represented a 1.8 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase, at $27.3 billion (2.9 percent), in their holdings of multifamily mortgage debt. Commercial banks increased their holdings of multifamily mortgage debt by $14.3 billion (2.4 percent), and life insurance companies increased holdings by $2.1 billion (1.1 percent). CMBS, CDO and other ABS issues saw the largest decline (11.9 percent) in their holdings, by $8.1 billion.

In percentage terms, nonfinancial corporate business recorded the largest increase in holdings of multifamily mortgages (3.5 percent), and private pension funds saw the biggest decrease (50.8 percent).

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2022

Between December 2021 and December 2022, commercial banks saw the largest gain in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $183 billion (11.7 percent). Agency and GSE portfolios and MBS increased their holdings of commercial/multifamily mortgages by $52.3 billion (5.8 percent). 

In percentage terms, REITs saw the largest increase (25.8 percent) in their holdings of commercial/multifamily mortgages.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2022

The $148.2 billion rise in multifamily mortgage debt outstanding during 2022 represents an 8.2 percent increase. In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt at 16.7 percent ($85.8 billion). CMBS, CDO and other ABS issues saw the largest decrease in their holdings, down $4.3 billion (6.7 percent).

The report’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, Trepp LLC, and data from Wells Fargo Securities. More information on this data series is contained in Appendix A.

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