Mortgage Debt Ticks Up

$ in Billions

Source: MBA

The level of multifamily mortgage debt outstanding increased by $60.7 billion (1.5 percent) in the second quarter of 2021, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report.

Total debt outstanding rose to $3.98 trillion at the end of the second quarter. Multifamily mortgage debt alone increased $23.8 billion (1.4 percent) to $1.7 trillion from the first quarter of 2021.

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

Commercial banks continue to hold the largest share (38 percent) of mortgages at $1.5 trillion. Agency and GSE portfolios and MBS are the second largest holders of mortgages (22 percent) at $871 billion. Life insurance companies hold $596 billion (15 percent), and CMBS, CDO and other ABS issues hold $557 billion (14 percent).

Looking solely at multifamily mortgages in the second quarter of 2021, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $871 billion (50 percent), followed by banks and thrifts with $491 billion (28 percent), life insurance companies with $174 billion (10 percent), state and local government with $106 billion (6 percent), and CMBS, CDO and other ABS issues holding $53 billion (3 percent). Nonfarm non-corporate businesses hold $20 billion (1 percent).

In the second quarter, commercial banks saw the largest gains in dollar terms in their holdings of mortgage debt–an increase of $23.4 billion, (1.6 percent). CMBS, CDO, and other ABS issues increased their holdings by $16.7 billion (3.1 percent), agency and GSE portfolios and MBS increased their holdings by $10.2 billion (1.2 percent), and life insurance companies increased their holdings by $8.7 billion (1.5 percent).

In percentage terms, other insurance companies saw the largest increase–5.0 percent–in their holdings of mortgages. Conversely, private pension funds saw their holdings decrease 5.7 percent.

The $23.8 billion increase in multifamily mortgage debt outstanding from the first quarter of 2021 represents a 1.4 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest gain–$10.2 billion (1.2 percent)–in their holdings of multifamily mortgage debt. Commercial banks increased their holdings by $10.0 billion (2.1 percent), and life insurance companies increased by $2.5 billion (1.5 percent). REITs saw the largest percentage increase in their holdings of multifamily mortgage debt, up $391 million (6.0 percent). Private pension funds saw the largest decline in their holdings of multifamily mortgage debt, down $65 million (12.5 percent).

Jamie Woodwell is the Mortgage Bankers Association’s vice president of commercial real estate research.