Commercial mortgage bonds ceded more ground to other kinds of lenders in the second quarter, according to the Mortgage Bankers Association.
The amount of commercial and multifamily mortgage debt outstanding ticked up from April through June, yet the balance of loans in commercial mortgage-backed securities continued its decline, with more loans being paid off than new loans being originated.
Total commercial and multifamily mortgage debt outstanding rose to $3.06 trillion at the end of June, an increase of $48.7 billion, or 1.6%, over the end of March.
Multifamily mortgage debt outstanding rose to $1.2 trillion in the second quarter, an increase of $21.7 billion, or 1.8%, over the first quarter.
It was the first time since 2015 that the dollar increase in multifamily mortgages was slower than the growth in debt backed by other property types, Jamie Woodwell, the MBA’s vice president of commercial real estate research, said in a press release.
At the same time, CMBS balances declined by $10 billion during the second quarter. And that followed a decline of more than $20 billion in the first quarter.
As a result, CMBS along with other kinds of securitizations, hold just $428 billion, or 14% of the total.
Woodwell said this may be one of the last quarters of this long-term trend, as the 10-year loans that were made in 2006 and 2007 have now almost all matured, and there are relatively few CMBS maturities during the remainder of 2017 and 2018.
Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.2 trillion, or 41%. Government sponsored enterprises are the second largest holders of commercial/multifamily mortgages, holding $553 billion, or 18%. (The figure includes both loans that the agencies hold on balance sheet and loans they have guaranteed and securitized.) Life insurance companies hold $448 billion, or 15% the total.
Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the “CMBS, CDO and other ABS” category, to avoid double counting.
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $553 billion, or 46% of the total. They are followed by banks and thrifts with $398 billion, or 33%. State and local governments hold $92 billion, or 8%; life insurance companies hold $71 billion, or 6%; CMBS, CDO and other ABS issues hold $41 billion, or 3%, and nonfarm noncorporate business holds $14 billion, or 1%.