Magazine article Mortgage Banking

Q2 Commercial/multifamily Mortgage Debt Outstanding Surpasses $2.4 Trillion

Magazine article Mortgage Banking

Q2 Commercial/multifamily Mortgage Debt Outstanding Surpasses $2.4 Trillion

Article excerpt

THE LEVEL OF COMMERCIAL/MULTIFAMILY MORTgage debt continued to grow during the second quarter of 2005 at a pace that rivaled previous records, according to a Mortgage Bankers Association (MBA) analysis of Federal Reserve Board Flow of Funds data.

At the end of the second quarter, $2.4 trillion in commercial/multifamily mortgage debt outstanding was recorded by the Fed, an increase of $72.5 billion or 3.1 percent from the first quarter of 2005. The record for a quarterly increase is the $72.9 billion added in the fourth quarter of 2004.

Meanwhile, multifamily mortgage debt outstanding stood at $630 billion at the end of the second quarter--an increase of $13 billion or 2.2 percent from the first quarter, according to MBA.

"Commercial banks and the commercial mortgage-backed securities markets have been leading the charge in channeling capital into commercial and multifamily mortgages," said Doug Duncan, MBA's chief economist and senior vice president of research and business development. "This sustained investment in commercial and multifamily real estate shows up in record origination volumes, record loan-servicing volumes, record levels of CMBS [commercial mortgage-backed securities] issuance and, here, in record levels of commercial/multifamily mortgage debt outstanding."

MBA's second-quarter survey of commercial/multifamily mortgage bankers showed mortgage bankers' origination volumes at their highest level since the survey began, while MBA's midyear survey of large CMBS servicers showed nine of the top 10 servicers increasing CMBS servicing volumes over the first six months of the year (see Mortgage Banking, October 2005, p. 198).

The Fed's Flow of Funds data summarize the holding of loans or, if the loans are securitized, the form of security. Commercial banks continued to hold the largest share of commercial/multifamily mortgages, with $1.05 trillion or 43 percent of the total.

CMBS pools were the second-largest holders of commercial/multifamily mortgages, holding $467 billion or 19 percent of the total. Life insurance companies held $258 billion or 11 percent of the total, and savings institutions held $191 billion or 8 percent of the total.

Government-sponsored enterprises (GSEs) and federally related mortgage pools--including Fannie Mae, Freddie Mac and Ginnie Mae--held $126 billion in multifamily loans that supported the mortgage-backed securities (MBS) they issued and an additional $65 billion whole loans in their own portfolios, for a total share of 8 percent outstanding commercial/multifamily mortgages. …

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