Total U.S. Commercial Mortgage Debt Hits $4.7 Trillion in Q1

In the first quarter, total commercial mortgage debt in the United States surged to $4.7 trillion, reflecting significant growth in the sector. This milestone highlights the expanding financial landscape and its potential implications for the economy, real estate market, and lending practices. Understanding these figures provides insight into the scale of investment and financing activities shaping the commercial property sector in the current economic environment.

Boston Brand Media brings you the news - According to the Mortgage Bankers Association's latest quarterly report on Commercial/Multifamily Mortgage Debt Outstanding, the total amount of commercial and multifamily mortgage debt in the U.S. increased by $40.1 billion (0.9 percent) in the first quarter of 2024.

By the end of the first quarter, the total outstanding commercial/multifamily mortgage debt reached $4.70 trillion. Specifically, multifamily mortgage debt rose by $23.7 billion (1.1 percent) to $2.10 trillion compared to the fourth quarter of 2023.

Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research, highlighted the growth despite sluggish mortgage originations. He noted that all major capital sources expanded their commercial mortgage holdings, with fewer loans being paid off through property sales or refinancings than usual.

The report categorizes the largest investors as follows: commercial banks hold the largest share (38 percent) with $1.8 trillion, followed by federal agency and government-sponsored enterprise (GSE) portfolios and mortgage-backed securities (22 percent, $1.01 trillion), life insurance companies ($720 billion, 15 percent), and commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs), and other asset-backed securities (ABS) issues ($604 billion, 13 percent). It is noted that many life insurance companies, banks, and GSEs also invest in CMBS, CDOs, and other ABS issues, which are categorized separately in the report.

The MBA's analysis distinguishes between loans held directly and those securitized, providing clarity on the type of security involved, such as whole loans held by life insurance companies versus securitized instruments like CMBS held by issuers and trustees.

MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the first quarter of 2024, agency and GSE portfolios and MBS dominate the multifamily mortgage market, holding the largest share of total outstanding debt at $1.01 trillion (48 percent). Banks and thrifts follow with $620 billion (30 percent), while life insurance companies account for $230 billion (11 percent). State and local governments hold $117 billion (6 percent), and CMBS, CDO, and other ABS issues hold $67 billion (3 percent) of the total multifamily mortgage debt outstanding.

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

During the first quarter, banks and thrifts experienced the largest dollar increase in their holdings of commercial/multifamily mortgage debt, rising by $12.8 billion (0.7 percent). CMBS, CDO, and other ABS issues followed with an increase of $11.0 billion (1.9 percent), while agency and GSE portfolios and MBS expanded by $10.2 billion (1.0 percent), and life insurance companies by $7.0 billion (1.0 percent).

In terms of percentage growth, CMBS, CDO, and other ABS issues recorded the highest increase at 1.9 percent in their commercial/multifamily mortgage holdings. Conversely, state and local government retirement funds saw a significant 8.3 percent decrease in their holdings during the same period.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $23.7 billion rise in multifamily mortgage debt outstanding from Q4 2023 reflects a quarterly increase of 1.1 percent. Agency and GSE portfolios and MBS recorded the largest dollar gain, adding $10.2 billion (1.0 percent) to their multifamily mortgage holdings. Banks and thrifts increased their holdings by $9.1 billion (1.5 percent), while life insurance companies saw a $3.8 billion (1.7 percent) increase.

Among nonfinancial corporate businesses, there was a notable 3.2 percent uptick in their multifamily mortgage holdings. Conversely, REITs experienced the largest decline, with their multifamily mortgage debt holdings decreasing by 9.7 percent.

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Source: worldpropertyjournal‍