Commercial and multifamily mortgage debt outstanding rose 1.5% in the second quarter, to $3.44 trillion, the Mortgage Bankers Association reports, based on an analysis of the Federal Reserve Board Flow of Funds.
Amid the current credit crunch turmoil, commercial and multifamily mortgage debt outstanding gained $51.3 billion from the first quarter of 2008. Multifamily mortgage debt outstanding alone grew to $875 billion, an increase of $16.3 billion or 1.9% from first quarter levels.
"Despite the persistent credit crunch, investors increased their holdings of commercial/multifamily mortgages in the second quarter," says Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "The only major investor group to see a decline in their holdings was the commercial mortgage-backed securities () market, which has been most profoundly affected by the credit crunch. Other investor groups including commercial banks, life insurance companies, thrifts and the government-sponsored enterprises (GSEs) increased their holdings over the quarter."
continue to hold the largest share of commercial/multifamily mortgages, at $1.46 trillion, or 43% of the total. However, the commercial mortgage loan total reported by commercial banks includes "commercial and industrial" loans backed by commercial property that has been pledged as collateral for a business loan. MBA has found that among the top 10 commercial real estate bank lenders, as much as 48% of their aggregate balance of commercial real estate loans could be related to owner-occupied properties.
The second largest holdings of commercial and multifamily mortgages are in the CMBS, collateralized debt obligation (CDO) and other asset-backed security (ABS) issuers category, which accounts for $762 billion, or 22% of the total. Lifehold $313 billion, or 9% of the total, and savings institutions hold $230 billion, or 7% of the total. The GSEs and agency - and GSE - backed mortgage pools (including Fannie Mae, Freddie Mac and Ginnie Mae) hold $146 billion in multifamily loans that support the mortgage-backed securities they issue and an additional $168 billion whole loans in their own portfolios, for a total share of 9% of outstanding commercial and multifamily mortgages.
Considering only multifamily mortgages, the GSEs and Ginnie Mae hold the largest share, accounting for 36% of the total multifamily debt outstanding. They are followed by commercial banks with $176 billion, or 20% of the total. CMBS, CDO and other ABS issuers hold $118 billion, or 14% of the total; savings institutions account for $97 billion, or 11% of the total. State and local governments hold $70 billion, or 8% of the total; and life insurance companies hold $50 billion, or 6% of the total.
In the second quarter, commercial banks saw the largest increase in dollar terms in their holdings of commercial and multifamily mortgage debt - an increase of $35 billion, or 3%, which represents 69% of the total $51 billion increase. Life insurance companies increased their holdings of commercial and multifamily mortgages by $4 billion, or 8%. GSEs increased their holdings of commercial and multifamily mortgages by $10 billion, or 6% - representing 20% of the net increase in commercial and multifamily mortgage debt outstanding. Agency and GSE-backed mortgage pools increased their holdings of multifamily mortgages by $3 billion, or 2.3%.