Commercial/Multifamily Mortgage Debt Rises at the End of 2020

Amid the pandemic and led by multifamily lending, mortgage debt outstanding closed 2020 higher than the pre-pandemic levels seen at the end of 2019.

$ in billions

Source: Mortgage Bankers Association
Source: Mortgage Bankers Association

Amidst the pandemic and led by multifamily lending, mortgage debt outstanding closed 2020 higher than the pre-pandemic levels seen at the end of 2019.

That is according to MBA’s recently released Commercial/Multifamily Mortgage Debt Outstanding report. In the final three months of 2020, total mortgage debt outstanding rose by 1.5 percent ($58.2 billion) compared to last year’s third quarter, with all four major investor groups increasing their holdings. Multifamily mortgage debt grew by $41.8 billion (2.5 percent) to $1.69 trillion during the fourth quarter, and by $127.9 billion (8.2 percent) for the entire year.

The level of commercial/multifamily mortgage debt outstanding at the end of 2020 was $212 billion (5.8 percent) higher than at the end of 2019.

Despite a fall-off in borrowing and lending during 2020, the total amount of commercial and multifamily mortgage debt outstanding increased during the year. Continuing the trend of previous quarters, growth in multifamily mortgage debt outpaced other property types, with increases in federally-backed mortgages from Fannie Mae, Freddie Mac, and FHA driving that growth. 

Commercial banks continue to hold the largest share (38 percent) of commercial/multifamily mortgages at $1.5 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages, at $838 billion (22 percent of the total). Life insurance companies hold $580 billion (15 percent), and CMBS, CDO and other ABS issues hold $533 billion (14 percent).

Strong appetites from all the major capital sources should keep growth going in 2021, but with key differences across property types.

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