The Mortgage Bankers Association (MBA) announced that the level of commercial and multifamily mortgage debt jumped by $99.5 billion, or 2.3%, between the first and second quarters of 2022. That was the largest quarterly jump since the MBA began tracking the data in 2007.
“The increase in holdings by depositories was the largest on record,” the release quoted Jamie Woodwell, MBA’s vice president of commercial real estate research, as saying. “The data match the fact that the first half of 2022 saw more commercial and multifamily borrowing and lending than any previous January through June period.”
Woodwell added that given changes “in space, equity, and debt markets” since January, the organization expects the “pace to slow considerably in coming quarters.”
According to the MBA, the four largest lender and investor groups are banks and thrifts; federal agency and government-sponsored enterprise (GSE) portfolios and mortgage-backed securities (MBS); life insurance companies; and finally, the set of commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs), and other asset-backed securities.
“Commercial banks continue to hold the largest share (38 percent) of commercial/multifamily mortgages at $1.7 trillion,” the report said. “Agency and GSE portfolios and MBS are the second-largest holders of commercial/multifamily mortgages (21 percent) at $919 billion. Life insurance companies hold $648 billion (15 percent), and CMBS, CDO and other ABS issues hold $613 billion (14 percent). Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the report in the ‘CMBS, CDO and other ABS’ category.”
An interesting question, impossible to answer from the data, is how much of the increase was activity to lock in new mortgages or refinancing in anticipation of rising rates.
In the second quarter, commercial banks saw the biggest gain in the value of their mortgage holdings at $51.9 billion or 3.2%. REITs were up $22.3 billion, or 14.4%. Insurance companies increased by $13.1 billion, or 2.1%. And GSE portfolios and MBS grew by 0.9%, or $8.0 billion.
In terms of changes in multifamily debt, banks again saw the largest increase at 5.4% or $28.5 billion in multifamily mortgage holdings. “Agency and GSE portfolios and MBS increased their holdings by $8.0 billion (0.9 percent), and life insurance companies increased by $3.9 billion (2.1 percent),” the report said.