For the first time in seven quarters the
level of outstanding commercial/multifamily mortgage debt grew in the U.S
according to information released Thursday by the Mortgage Bankers Association
(MBA). The Association said that total
debt rose $3.5 billion or 0.1 percent in the second quarter of 2011 to a total
of $2.4 trillion. The last time total
debt increased was in the third quarter of 2009.
Investment in multifamily mortgage debt
increased by $3.9 billion or 0.5 percent 0from first quarter 2011 figures to
$802.2 billion. Agency and GSE
portfolios and mortgage backed securities (MBS) accounted for $331.8 billion or
41 percent of the debt and banks and thrifts held $215.8 billion or 26.9
percent. Both sectors increased their
holdings; the Agency/GSE/MBA sector by $4 billion (1.3 percent) and banks and
thrifts by 1.3 billion (0.6 percent).
Life insurance companies comprised the only other sector where the share
of multifamily mortgage debt rose. The
sector took on $0.7 billion or 1.5% more debt, the largest percentage change of
any sector. Agency/GSE/MBAs accounted
for 113.5 percent of the net change in debt and banks and thrifts for 34.1
Debt held by CMBS, CDO, and other ABS issues
fell by $1.6 billion or -1.6 percent.
This change represented -41 percent of the net change in multifamily
debt. While they hold only a small portion of the
overall multifamily debt, nonfinancial corporate businesses divested over half
the debt they held in the first quarter of 2011, dropping from $250 million to
$103 million, a 58.8 percent change.
Debt held by private pension funds fell 5.3 percent and finance
companies by 4.6 percent.
The quarter-over-quarter change by dollar and
(percent change) in other sectors: state
and local governments, $0.24 billion (-0.3); federal government, $0.195 billion
(-1.4); non-farm, non-corporate business, $31 million (-0.3) state and local government
retirement funds, $5 million (-0.2); and REITs, $4 million (-0.2).
The largest increase in total mortgage debt, commercial
and multifamily, was in the REIT sector where holdings increased by $2.5
billion or 7.7 percent. Banks and
thrifts, the largest holders of debt at 33.5 percent, decreased their holdings
by $2.6 billion or -0.3 percent and CMBS, CDO, and other ABS issues which is
the second largest sector, fell by $1.4 billion or -0.2 percent.
“For the first time in a year-and-a-half, new
commercial and multifamily mortgage originations outpaced the paying off and
paying down of existing loans,” Jamie Woodwell, MBA’s Vice President of
Commercial Real Estate Research said. “Increases
in the balance of mortgages held and insured by life insurance companies,
Fannie Mae, Freddie Mac, and FHA outpaced declines among banks and thrifts and
analysis summarizes the holdings of loans or, if the loans are securitized, the
form of the security. For example, many life insurance companies invest both in
whole loans for which they hold the mortgage note (and which appear in this
data under “life insurance companies”) and in commercial
mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other
asset backed securities (ABS) for which the security issues and trustees hold
the note (and which appear here under CMBS, CDO and other ABS issues).
analysis is based on data from the Federal Reserve Board’s Flow of Funds
Account of the United States and the Federal Deposit Insurance Corporation’s
Quarterly Banking Profile.