Commercial Debt Declines Partially Offset by Multi-Family

Commercialrnand multifamily mortgage debt fell by $4.9 billion in the firstrnquarter of 2013. The total debt in the first quarter was $2.41rntrillion, down 0.2 percent from the fourth quarter of 2012 and thernfirst quarterly decrease since the third quarter of 2011.</p

ThernMortgage Bankers Association (MBA) said that outstanding multifamilyrnmortgage debt increased by $4.1 billion or 0.5 percent in the quarterrnto a total of $842 billion. Most investment sectors increased theirrnmultifamily holdings during the quarter.</p

“After<bfive quarterly increases, the amount of commercial and multifamilyrnmortgage debt outstanding fell slightly in the first quarter,” saidrnJamie Woodwell, MBA’s Vice President of Commercial Real EstaternResearch.  “Banks and thrifts, Fannie Mae, Freddie Mac and FHArnincreased their commercial and multifamily holdings, but the balancernof loans in commercial mortgage-backed securities resumed itsrndecline.”</p

Atrn35 percent of the total, commercial banks continue to hold thernlargest share of commercial and multifamily mortgage debt. Commercial mortgage-backed securities (CMBS), collateralized debtrnobligations (CDOs), and other asset backed securities (ABS) are thernsecond largest holders with $562 billion or 23 percent of the totalrnand 16 percent or $383 billion was held by Agency/GSE portfolios andrnMBS. Life insurance companies hold $322 billion or 13 percent.</p

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Breakingrnout just multifamily debt, the largest share debt was held by Agencyrnand GSE portfolios and MBS, a total of 382.6 billion or 45.4 percentrnof the total. This was an increase of $3.7 billionrnquarter-over-quarter or 1 percent. Commercial banks increased theirrnholdings by 2.7 billion or 1.2 percent to a total of $236.8 billionrnor 28.1 percent of the total. CMBS, CDO, and other ABS issuesrndecreased their multifamily holdings by $3.5 billion or 4.8 percentrnbut remained the third largest holder of multifamily debt with arntotal of $68.9 billion or an 8.2 percent share. State and localrngovernments, the fourth largest holder of this debt, increased theirrnholdings during the quarter by $577 million or 0.9 percent. </p

The<blargest increase in holdings on a percentage basis was among RealrnEstate Investment Trusts (REIT) which rose by 16 percent. Thernlargest percentage decline was local government retirement funds (-10rnpercent.).</p

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MBA’srnanalysis is based on data from the Federal Reserve Board’s Flow ofrnFunds Account of the United States and the Federal Deposit InsurancernCorporation’s Quarterly Banking Profile. The analysis summarizesrnthe holdings of loans or, if the loans are securitized, the form ofrnthe security. For example, many life insurance companies invest bothrnin whole loans for which they hold the mortgage note (and whichrnappear in this data under Life Insurance Companies) and in CMBS, CDOsrnand ABS for which the security issuers and trustees hold the notern(and which appear here under CMBS, CDO and other ABS issues).

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