Commercial/Multifamily Mortgage Debt Has Increased for 33 Consecutive Quarters

In MBA’s third quarter of 2020 Commercial/Multifamily Mortgage Debt Outstanding report, mortgage debt outstanding rose by $57.0 billion.

$ in billions

Sources: MBA, Federal Reserve Board of Governors, Trepp LLC, Wells Fargo Securities LLC, Intex Solutions Inc. and FDIC.
Sources: MBA, Federal Reserve Board of Governors, Trepp LLC, Wells Fargo Securities LLC, Intex Solutions Inc. and FDIC.

Look no further than the challenges of 2020 to get a sense of the ever-changing headwinds and tailwinds that commercial real estate finance has faced over the past eight-plus years. One thing that has remained constant? The amount of mortgage debt backed by commercial and multifamily properties has increased for 33 straight quarters.

In MBA’s third quarter of 2020 Commercial/Multifamily Mortgage Debt Outstanding report, mortgage debt outstanding rose by $57.0 billion (1.5 percent) to $3.82 trillion. Multifamily mortgage debt alone increased $31.0 billion (1.9 percent) to $1.6 trillion from the second quarter of last year.

Where was activity the strongest? Despite a significant fall-off in acquisition financing in the last two quarters, loan refinancings, particularly for FHA, Fannie Mae, Freddie Mac and bank balance sheets, helped lift total mortgage balances.

Overall, commercial banks continue to hold the largest share (39 percent) of commercial/multifamily mortgages at $1.5 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages (21 percent) at $798 billion. Life insurance companies hold $577 billion (15 percent), and CMBS, CDO and other ABS issues hold $529 billion (14 percent).

Looking ahead to 2021, how quickly and effective vaccines are in controlling the pandemic will be key. Continued uncertainty about the pandemic’s long-term impacts will likely continue to weigh on new financing in the coming quarters. However, the fact that vaccine rollouts are commencing do appear reflect a light at the end of tunnel regarding the pandemic.

Jamie Woodwell is the Mortgage Bankers Association’s vice president of commercial real estate research.