Multifamily Leads Growth in Mortgage Debt Outstanding in Q1 2021

This indicator grew by $44.6 billion, according to MBA’s latest report.

$ in Billions

Source: MBA, Federal Reserve Board of Governors, Trepp LLC, Wells Fargo Securities, LLC, Intex Solutions, Inc. and FDIC
Source: MBA, Federal Reserve Board of Governors, Trepp LLC, Wells Fargo Securities, LLC, Intex Solutions, Inc. and FDIC

The COVID-19 pandemic since last March has impacted the various property types and capital sources in different ways. Throughout it, multifamily loan performance and lending activity has held steady.

According to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report, the level of commercial/multifamily mortgage debt outstanding rose by $44.6 billion (1.1 percent) in the first quarter of 2021. Total commercial/multifamily debt outstanding rose to $3.93 trillion at the end of the first quarter, with multifamily mortgage debt alone increasing $28.8 billion (1.7 percent) to $1.7 trillion from the fourth quarter of 2020.

The pandemic-era growth in the amount of commercial and multifamily mortgage debt outstanding continued during the first quarter, but the growth was not evenly distributed. All of the major capital sources increased their holdings of commercial and multifamily mortgages during the quarter, but almost two-thirds of the overall growth came from multifamily properties, with 80 percent of that multifamily growth coming from federally-backed Agency and GSE mortgage-backed securities and portfolios.

Looking solely at multifamily mortgages in the first quarter of 2021, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $861 billion (50 percent), followed by banks and thrifts with $481 billion (28 percent), life insurance companies with $171 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 $19 billion (1 percent).

As the uncertainty from the COVID-19 pandemic wanes, lenders will have greater clarity into the different properties and property types and be in stronger positions to make new loans. This is especially true for multifamily, with low rates spurring refinance activity and strong housing demand.