US Commercial Mortgage Debt Worth $ 3.8 Trillion In Q3

The Association of Mortgage Bankers' latest quarterly report on commercial / multi-unit mortgages shows that the level of outstanding debt on commercial / multi-unit mortgages in the United States increased by $ 57.0 billion (1.5 percent) in the third quarter of 2020.

Total outstanding commercial / multi-family debt rose to $ 3.82 trillion at the end of the third quarter. Borrowed debt on apartment buildings alone increased by $ 31.0 billion (1.9 percent) to $ 1.6 trillion from the second quarter of 2020.

"The amount of mortgage debt backed by commercial and multi-unit real estate has increased for the 33rd consecutive quarter," said Jamie Woodwell, MBA vice president of commercial real estate research. “Despite significant declines in acquisition funding over the past two quarters, loan refinancing, especially for FHA, Fannie Mae, Freddie Mac and bank balance sheets, helped raise overall mortgage balances. There is likely to remain uncertainty about the long-term impact of the pandemic to weigh new funding in the coming quarters. However, positive news about vaccines reflects a light at the end of the pandemic tunnel. ”

The four largest investor groups: banks and savings banks; portfolios of federal agencies and government-sponsored enterprises (GSE) and mortgage-backed securities (MBS); life insurance companies; and the issuance of commercial mortgage-backed securities (CMBS), secured debt obligations (CDO) and other asset-backed securities (ABS).

Commercial banks continue to account for the largest share (39 percent) of $ 1.5 trillion in commercial / multi-unit mortgages. The agency portfolios, GSE and MBS, are the second largest holders of commercial / multi-unit mortgages (21 percent) at $ 798 billion. Life insurance companies hold $ 577 billion (15 percent) while CMBS, CDO and other ABS issues hold $ 529 billion (14 percent). Many life insurance companies, banks and GSEs buy and hold CMBS, CDO and other ABS issues. These loans are reported under the CMBS, CDO, and other ABS categories.

The MBA analysis summarizes the loan holdings or, if the loans are securitized, the form of collateral. For example, many life insurance companies invest both in whole loans, for which they hold a mortgage letter (and which appear in this data in the section "Life insurance companies"), and in CMBS, CDO and other ABS, for which issuers of valuable securities and trustees hold promissory notes (and which appear here under CMBS, CDO and other ABS issues).

NON-DISTRIBUTED MORTGAGE

Looking exclusively at multi-family mortgages in the third quarter of 2020, the agency, GSE and MBS portfolios account for the largest share of the total outstanding multi-family debt of $ 798 billion (48 percent), followed by banks and savings institutions with $ 478 billion ( 29 percent), life insurance. companies with revenue of $ 168 billion (10 percent), state and local governments with $ 108 billion (7 percent); and CMBS, CDO and other ABS problems with $ 52 billion (3 percent). Nonfarm unincorporated enterprises own $ 20 billion (1 percent).

CHANGES IN THE SALE OF COMMERCIAL / MULTI-FAMILY MORTGAGES

In the third quarter, both the GSE and MBS portfolios posted the largest dollar gains in their commercial / multi-family mortgage holdings, by $ 23.2 billion (3.0 percent). Commercial banks increased their holdings by $ 12.1 billion (0.8 percent), CMBS, CDO and other ABS issues increased their holdings by $ 10.6 billion (2.1 percent), and REITs increased their holdings by 4.9 percent. billion dollars (5.6 percent). In percentage terms, REITs posted the largest growth - 5.6 percent - in their commercial / multi-family mortgages. Conversely, the federal government saw their holdings decrease 2.0 percent.

CHANGES IN PERFORMANCE OF MULTI-FAMILY MORTGAGE DEBT

The $ 31.0 billion increase in outstanding multi-unit mortgage debt since the second quarter of 2020 represents an increase of 1.9 percent. In dollar terms, the portfolios of agencies, GSE and MBS saw the largest gains - $ 23.2 billion (3.0 percent) - in their holdings of multi-family mortgage debt. Commercial banks increased their holdings by $ 4.4 billion (0.9 percent), while state and local governments increased by $ 3.2 billion (3.0 percent). CMBS, CDO and other ABS issues experienced the largest reduction in their polysemy holdingseine mortgage debt - by $ 835 million (1.6 percent).

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