According to a new report from the Mortgage Bankers Association (MBA), the level of commercial and multifamily mortgage debt that was outstanding during the fourth quarter of 2023 increased $130 billion, or 2.8%, year-over-year.
In total, the MBA’s report stated that total mortgage debt rose by 0.9%, or $41.8 billion, to a total of $4.69 trillion. Multifamily mortgage debt grew by $25 billion, or 1.2%, during the fourth quarter alone and by $88.5 billion, or 4.4%, year-over-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).
According to the MBA, commercial banks continue to hold the largest share (38%) 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% of the total). Life insurance companies hold $733 billion (16%), and CMBS, CDO and other ABS issues hold $593 billion (13%).
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% of the total), followed by commercial banks with $612 billion (29%), life insurance companies with $235 billion (11%), state and local governments with $116 billion (6%), and CMBS, CDO and other ABS issues with $67 billion (3%).
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%). Commercial banks increased their holdings by $14.8 billion (0.8%), Life insurance companies increased their holdings by $9.9 billion (1.4%), and nonfinancial corporate business increased their holdings by $1.3 billion (1.1%). Finance companies saw the largest decline (5.0%) at $1.9 billion.
In percentage terms, agency and GSE portfolios and MBS saw the largest increase—1.6%—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% increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase, at $15.5 billion (1.6%), in their holdings of multifamily mortgage debt. Commercial banks increased their holdings of multifamily mortgage debt by $5.3 billion (0.9%), and life insurance companies increased holdings by $5.2 billion (2.2%). Finance companies saw the largest decline (8.9%) in their holdings, by $1.2 billion.
In percentage terms, life insurance companies recorded the largest increase in holdings of multifamily mortgages (2.2%), and finance companies saw the biggest decrease (8.9%).
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