Commercial, Multifamily Debt Declines in Q1

Commercial, Multifamily Debt Declines in Q1


Commercial and multifamily mortgage debt outstanding decreased for the first time in five quarters during the first quarter of this year, according to the Mortgage Bankers Association (MBA).

The 0.2 percent decline, which translated to $4.9 billion, left the nation’s total commercial and multifamily mortgage debt at $2.41 trillion at the end of the quarter.

“Banks and thrifts, Fannie Mae, Freddie Mac, and FHA increased their commercial and multifamily holdings, but the balance of loans in commercial mortgage-backed securities resumed its decline,” said Jamie Woodwell, VP of commercial real estate research for the MBA.

The greatest decline in commercial and multifamily debt took place among commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDO), and asset-backed securities (ABS). They shed $4.8 billion in debt over the first quarter of this year.

The next-greatest decline took place among private pension funds, which decreased their commercial and multifamily debt by 17 percent over the quarter.

In contrast, agency and GSEs and mortgage-backed securities increased their holdings by $3.7 billion.

Despite the overall decline in commercial and multifamily debt, the multifamily sector alone experienced a $4.1 billion increase over the first quarter of the year.

Agencies and GSEs account for the greatest share of multifamily debt, claiming 45 percent, or $383 billion.

Banks and thrifts hold the next-largest share of multifamily debt—28 percent, or $237 billion.

The remainder is distributed between, CMBS, CDC, and other ABS (8 percent); state and local governments (8 percent); life insurance companies (6 percent); and nonfarm, noncorporate businesses, respectively (2 percent).

The $4.1 billion increase in multifamily debt was driven by agency and GSE and MBS activity. Together, they contributed $3.7 billion of the increase. Commercial banks also took on an additional $2.7 billion.

However, CMBS, CDC, and other ABS shed some of their multifamily debt—about $3.5 billion over the quarter.

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