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Special Reports
Commercial Lending
Commercial, Multifamily Debt Continues to Grow
A 3.4% growth over the three-month period.
WASHINGTON -- Commercial and multifamily mortgage debt outstanding continues to
grow, as real estate continues to hold investors' fancy, reaching the $2.5 trillion mark for the third quarter.
This represents a 3.4% growth, or an increase of $83.8 billion, over the previous
three-month period, the Mortgage Bankers Association reports, based on an analysis of flow of funds data from the
Federal Reserve Board.
Considering debt backed by multifamily properties alone, there was a 1.5% rise
in debt outstanding at the end of the third quarter to $641 billion.
"The commercial/multifamily mortgage market continues to be buoyed by modest
long-term interest rates, improving property fundamentals and strong equity flows," said Doug Duncan, the
MBA's chief economist.
"The result is a quarter with record originations, record increases in mortgage
debt outstanding, near records in CMBS (commercial mortgage-backed securities) issuance and record increases in
commercial bank's commercial/multifamily mortgage holdings."
CMBS issuance for the third quarter was at $38.3 billion, representing a decline
of 3% over the issuance for the second quarter, but making for a 78% increase over the issuance for the third quarter
of 2004.
Commercial banks hold $1.1 trillion of the debt outstanding, representing 43%
of the total.
CMBS pools hold $499 billion of the debt, or 20% of the total, followed by life
insurance companies with $261 billion, or 10% of the total, and savings institutions with $193 billion, or 8% of
the total.
Fannie Mae, Freddie Mac and Ginnie Mae hold $128 billion in multifamily loans
that back the securities they issue, as well as another $65 billion in loans on their own portfolios, making for
a total share of 8% of the debt outstanding.
Considering just multifamily debt outstanding, Fannie Mae, Freddie Mac and Ginnie
Mae hold 30% of the total debt outstanding, the MBA reports.
Commercial banks hold 21% of the multifamily debt outstanding, followed by savings
institutions with 15%, CMBS issuers with 13%, state and local governments at 9% and life insurance companies at
6.5% of the total.
In the third quarter, commercial banks saw their holdings of commercial/multifamily
debt go up $49 billion, or 5%, the largest increase in dollar terms.
CMBS issuers saw their holdings rise $23 billion, representing 27% of the total
increase in debt.
Commercial banks also saw the largest increase of $6.5 billion in their holdings
of multifamily mortgage debt. Fannie Mae, Freddie Mac and Ginnie Mae holdings for securitization saw a $1.8 billion
increase.
In percentage terms, real estate investment trusts saw the biggest increase, a
20% jump, in their holdings of multifamily debt, while the holdings of "non-farm, non-corporate businesses"
dropped off the most, declining 11%.
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