Multifamily mortgage debt outstanding increased 1.9% ($36.1 billion) to $1.93 trillion at the end of the third quarter, according to the Mortgage Bankers Association’s latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report.
With a $26.6 billion increase, commercial banks and thrifts saw the largest gains (4.8%) in holdings of multifamily mortgage debt, according to the MBA. Life insurance companies saw a 1.1% ($2.0 billion) addition, while agency and government-sponsored enterprise (GSE) portfolios and mortgage-backed securities increased their holdings by 0.8% ($7.5 billion).
The overall commercial and multifamily real estate mortgage debt outstanding increased by $70.0 billion (1.6%) to $4.45 trillion at the end of the third quarter, according to MBA.
Jamie Woodwell, MBA’s head of commercial real estate research, said a huge jump in the portfolio holdings of banks and other depositories drove the increase.
“The increase in bank holdings was the largest quarterly increase of any individual capital source in the history of MBA’s series,” Woodwell said in a press release. “For most other capital sources, their holdings of commercial and multifamily mortgages grew at a slower rate than during the second quarter of 2022.”
The four largest investors groups are banks and thrifts; federal agency and GSE portfolios and mortgage backed securities (MBS); life insurance companies; and commercial mortgage backed securities (CMBS), collateralized debt obligation (CDO) and other asset backed securities (ABS) issues.
Most multifamily debt held at the end of November
|Lender||% of market||Total $|
|Agency, GSE and MBS||48%||$926 billion|
|Banks and thrifts||30%||$584 billion|
|Life insurance companies||10%||$189 billion|
|State and local governments||6%||$111 billion|
|CMBS, CDO and other ADS||4%||$68 billion|
Though banks led the way in the overall commercial real estate sector, the GSEs could fund much of the multifamily activity in 2023, even with lending caps that are slightly lower. But there are a lot of questions in what should be a slower year.
“You may see agency market share go up, but an overall smaller market,” said Dan Brendes, senior vice president and head of GSE aending at New York-based commercial real estate services firm Berkadia. “Generally speaking, we see a slower first half and a busier second half. How that plays out is really the tough part to nail down.”
The MBA debt report comes on the heels of its latest Commercial/Multifamily Delinquency Report, which showed that delinquency rates remained low overall. Loans that were 60 or more days delinquent for Fannie Mae decreased by 0.08 percentage points from the second quarter to 0.26%. However, those loans increased by 0.06 percentage points to 0.13% for Freddie Mac.
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