Fewer refinancings and payoffs led to higher outstanding commercial and multifamily debt
The amount of commercial real estate debt held by banks and other institutions continues to rise despite a slowdown in new loan originations.
According to the Mortgage Bankers Association's (MBA’s) latest data, the outstanding commercial/multifamily mortgage debt in the US increased by $40.1 billion, or 0.9%, in the first quarter of 2024, reaching $4.70 trillion.
This increase occurred despite sluggish mortgage origination activity, as fewer loans than normal were paid off through property sales or refinancings during the quarter.
“Every major capital source increased its holdings of commercial mortgages, as fewer loans than usual were paid off through property sales or refinancings,” said Jamie Woodwell, head of commercial real estate research at MBA
MBA’s report said commercial banks remained the largest holders of commercial/multifamily mortgages at $1.8 trillion or 38% market share. Federal agencies and government-sponsored enterprises hold $1.01 trillion (22%), followed by life insurers at $720 billion (15%) and commercial mortgage-backed securities at $604 billion (13%).
Looking solely at multifamily mortgage debt, agencies and GSEs held the largest $1.01 trillion share (48%), trailed by banks at $620 billion (30%) and life insurers at $230 billion (11%).
In the first quarter, banks saw commercial/multifamily mortgage holdings increase by $12.8 billion, the largest gain in dollar terms. CMBS issuers increased holdings by $11.0 billion, while agencies/GSEs and life insurers grew by $10.2 billion and $7.0 billion, respectively.
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For multifamily debt specifically, agencies/GSEs increased holdings by $10.2 billion, banks by $9.1 billion, and life insurers by $3.8 billion.
According to the MBA, the outstanding mortgage debt increased as payoffs declined rather than from an uptick in new originations. Fewer property sales and refinancings meant fewer loans were retired from lender portfolios.
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