"Strong appetites from all the major capital sources should keep growth going in 2021"
Outstanding commercial/multifamily mortgage debt was 5.8% higher in 2020 than it was the year before, according to a new report by the Mortgage Bankers Association (MBA).
At the end of 2020, the commercial/multifamily mortgage debt level was $212 billion. Total mortgage debt in the fourth quarter of 2020 was $58.2 billion, up 1.5% from the third quarter. All four major investor groups, including commercial mortgage-backed securities (CMBS) and government-sponsored enterprise (GSE) portfolios and mortgage-backed securities (MBS), saw their holdings increase. Bank and thrift, collateralized debt obligation (CDO) and other asset-backed securities (ABS) issues, as well as life insurance companies, also showed growth in their holdings.
Meanwhile, multifamily mortgage debt increased by $41.8 billion quarter over quarter and $127.9 billion year over year to a total of $1.69 trillion.
“Despite a fall-off in borrowing and lending during 2020, the total amount of commercial and multifamily mortgage debt outstanding increased during the year,” said Jamie Woodwell, MBA’s VP of Commercial Real Estate Research.
Commercial banks continued to hold the largest share of commercial/multifamily mortgage with 38% totaling $1.5 trillion. Agency and GSE portfolios and MBS were the second-largest holders with $838 billion. Life insurance companies hold $580 billion, and CMBS, CDO, and other ABS issues hold $533 billion.
Looking solely at multifamily properties, agency and GSE portfolios and MBS hold half of the total outstanding debt at $838 billion, followed by commercial banks with $480 billion (28%), life insurance companies with $168 billion (10%), state and local governments with $106 billion (6%), and CMBS, CDO and other ABS issues with $51 billion (3%).
“Continuing the trend of previous quarters, growth in multifamily mortgage debt outpaced other property types, with increases in federally-backed mortgages from Fannie Mae, Freddie Mac, and FHA driving that growth. Strong appetites from all the major capital sources should keep growth going in 2021, but with key differences across property types,” Woodwell said.
