Multifamily Mortgage Debt Outstanding Grew 2% in Second Quarter

By Anuradha Kher, Online News EditorWashington, D.C.–While most investor groups increased holdings, Commercial Mortgage Backed Securities (CMBS) declined in the second quarter of 2008, according to the Mortgage Bankers Association’s (MBA) analysis of the Federal Reserve Board Flow of Funds data. The level of commercial/multifamily mortgage debt outstanding grew by 1.5 percent in this period, to $3.44 trillion.This is an increase of $51.3 billion over the first quarter 2008. The $16 billion increase in multifamily mortgage debt outstanding between the first quarter and second quarter of 2008 represents a 2 percent increase. In dollar terms, the Government Sponsored Enterprises saw the largest increase in their holdings of multifamily mortgage debt, an increase of $10 billion or 6 percent. Agency and GSE-backed mortgage pools increased their holdings of multifamily mortgage debt by $3.3 billion, or 2.3 percent. Commercial banks increased by $3.2 billion, or 1.8 percent.  “The major reason for this increase in the last quarter is that investors view multifamily mortgages as a good place to invest in due to their strong performance during the rough times facing the economy. Our delinquency report supports this,” Jamie Woodwell, MBA’s vice president of commercial real estate research, tells MHN.He adds, that “in general, despite the credit crunch, most investor groups have increased their multifamily mortgages,  particularly due to the GSEs-Fannie Mae, Freddie Mac and Ginnie Mae who continue to be a major source of finance for multifamily.”Multifamily mortgage debt outstanding grew to $875 billion, an increase of $16.3 billion or 1.9 percent from the first quarter. “Despite the persistent credit crunch, investors increased their holdings of commercial/multifamily mortgages in the second quarter. The only major investor group to see a decline in their holdings was the CMBS market, which has been most profoundly affected by the credit crunch. Other investor groups including commercial banks, life insurance companies, thrifts and the GSEs increased their holdings over the quarter,” adds Woodwell. Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.46 trillion, or 43 percent of the total but when it comes to  multifamily mortgages only, the GSEs and Ginnie Mae hold the largest share of multifamily mortgages, with $146 billion in federally related mortgage pools and $168 billion in their own portfolios or 36 percent of the total multifamily debt outstanding.  They are followed by commercial banks with $176 billion, or 20 percent of the total. CMBS, CDO and other ABS issuers hold $118 billion, or 14 percent of the total; savings institutions with $97 billion, or 11 percent of the total; state and local governments with $70 billion, or 8 percent of the total; and life insurance companies with $50 billion, or 6 percent of the total. However, CMBS, CDO and other ABS issues saw the biggest drop in their holdings of multifamily mortgage debt by $3 billion, or -2.7 percent.