WASHINGTON, D.C. (March 14, 2024) – The level of commercial and multifamily mortgage debt outstanding at the end of 2023 was $130 billion (2.8 percent) higher than at the end of 2022, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report.
MBA’s report found that total mortgage debt outstanding rose by 0.9 percent ($41.8 billion) to $4.69 trillion in fourth-quarter 2023. Multifamily mortgage debt grew by $25.0 billion (1.2 percent) to $2.09 trillion during the fourth quarter, and by $88.5 billion (4.4 percent) for the entire year.
“The amount of commercial mortgage debt outstanding grew in the final quarter of 2023 and for the year as a whole,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “However, the increase was among the slowest paces since the mid-2010s. Every major capital source increased its mortgage holdings during the year. Mortgage originations were down by roughly 50 percent in 2023 compared to 2022, but that meant that few loans were paying off, helping maintain portfolio sizes even in the face of lower inflows.”
The four major investor groups are: bank and thrift; commercial mortgage-backed securities (CMBS), collateralized debt obligation (CDO) and other asset backed securities (ABS) issues; federal agency and government sponsored enterprise (GSE) portfolios and mortgage-backed securities (MBS); and life insurance companies.
MBA’s 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 CMBS, CDOs and other ABS for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues).
Commercial banks continue to hold the largest share (38 percent) of commercial/multifamily mortgages at $1.8 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages at $1.0 trillion (21 percent of the total). Life insurance companies hold $733 billion (16 percent), and CMBS, CDO and other ABS issues hold $593 billion (13 percent).
MULTIFAMILY MORTGAGE DEBT OUTSTANDING
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total debt outstanding at $1.0 trillion (48 percent of the total), followed by commercial banks with $612 billion (29 percent), life insurance companies with $235 billion (11 percent), state and local governments with $116 billion (6 percent), and CMBS, CDO and other ABS issues with $67 billion (3 percent).
CHANGES IN COMMERCIAL & MULTIFAMILY MORTGAGE DEBT OUTSTANDING
In the fourth quarter of 2023, Agency and GSE portfolios and MBS saw the largest rise in dollar terms in their holdings of commercial/multifamily mortgage debt, with an increase of $15.5 billion (1.6 percent). Commercial banks increased their holdings by $14.8 billion (0.8 percent), Life insurance companies increased their holdings by $9.9 billion (1.4 percent), and nonfinancial corporate business increased their holdings by $1.3 billion (1.1 percent). Finance companies saw the largest decline (5.0 percent) at $1.9 billion.
In percentage terms, agency and GSE portfolios and MBS saw the largest increase – 1.6 percent – in their holdings of commercial/multifamily mortgages.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING
The $25.0 billion rise in multifamily mortgage debt outstanding between the third and fourth quarters of 2023 represented a 1.2 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase, at $15.5 billion (1.6 percent), in their holdings of multifamily mortgage debt. Commercial banks increased their holdings of multifamily mortgage debt by $5.3 billion (0.9 percent), and life insurance companies increased holdings by $5.2 billion (2.2 percent). Finance companies saw the largest decline (8.9 percent) in their holdings, by $1.2 billion.
In percentage terms, life insurance companies recorded the largest increase in holdings of multifamily mortgages (2.2 percent), and finance companies saw the biggest decrease (8.9 percent).
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2023
Between December 2022 and December 2023, agency and GSE portfolios and MBS saw the largest gain in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $49 billion (5.1 percent). Life insurance companies increased their holdings of commercial/multifamily mortgages by $43.5 billion (6.3 percent).
In percentage terms, nonfinancial corporate business saw the largest increase (12.7 percent) in their holdings of commercial/multifamily mortgages.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING DURING 2023
The $88.5 billion rise in multifamily mortgage debt outstanding during 2023 represents a 4.4 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt at 5.1 percent ($49.0 billion). Finance companies saw the largest decrease in their holdings, down $2.7 billion (17.7 percent).
The report’s analysis is based on data from the Federal Reserve Board’s Financial Accounts of the United States, the Federal Deposit Insurance Corporation’s Quarterly Banking Profile, and Trepp LLC. More information on this data series is contained in Appendix A.