Multifamily sector sees rapid expansion as lending activity shifts toward agency-backed financing
Multifamily mortgage debt continues to outgrow the broader commercial real estate (CRE) sector, marking the 10th consecutive quarter of faster expansion, according to the Mortgage Bankers Association’s (MBA) latest report.
At the close of 2024, total commercial and multifamily mortgage debt stood at $4.79 trillion, reflecting a 3.7% year-over-year increase. Multifamily debt alone grew 5.4% to $2.16 trillion, contributing $111 billion to the overall rise.
“Commercial and multifamily mortgage debt outstanding increased to almost $4.8 trillion in the fourth quarter of 2024, up 3.7% compared to last year,” said MBA chief economist Mike Fratantoni.
“For the tenth consecutive quarter, multifamily debt outstanding increased at a faster rate than the overall CRE market. Almost 56% of the growth in multifamily MDO reflected growth in agency and GSE portfolios and mortgage-backed securities (MBS).”
Commercial banks and thrifts continue to hold the largest share of commercial and multifamily mortgages, with $1.8 trillion in outstanding debt, accounting for 38% of the market.
Read next: Proposed tax change could slow multifamily housing growth - NAHB
Agency and GSE portfolios and MBS follow at $1.1 trillion (22%). Life insurance companies hold $779 billion (16%). CMBS, CDO, and other ABS issuers hold $626 billion (13%).
Among investor groups, life insurance companies saw the largest growth in commercial mortgage debt, contributing nearly 39% of the annual increase. Banks, in contrast, increased their holdings by just 1%, accounting for 10.5% of the total growth.
Despite steady lending activity, multifamily construction has been lackluster. High-density urban areas have seen seven consecutive quarters of decline following their 2022 peak, while smaller markets continue to gain market share, according to the National Association of Home Builders (NAHB).
The multifamily construction market share at the end of 2024 was divided as follows:
- 38.5% in large metro core counties
- 24.9% in large metro suburban counties
- 4.0% in large metro outlying counties
- 23.3% in small metro core counties
- 4.9% in small metro outlying areas
- 3.3% in micro counties
- 1.1% in non-metro/micro counties
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
