Mid-2023 U.S. commercial mortgage debt rises to $4.60 Trillion

In the second quarter of 2023, the amount of commercial and multifamily mortgage debt in the U.S. went up by $37.7 billion, or 0.8%, according to the latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report from the Mortgage Bankers Association.

At the end of the second quarter, the total amount of business and multifamily mortgage debt was $4,600,000,000,000. From the first quarter of 2023 to the second quarter of 2023, multifamily mortgage debt alone went up by $26.4 billion, or 1.3%, to $2.03 trillion.

"Commercial and multifamily mortgage debt outstanding rose again in the second quarter," said Jamie Woodwell, MBA's Head of Commercial Real Estate Research. "This was caused by increases in the mortgage holdings of life companies, the GSEs, banks, and other depositories." "Compared to a year ago, the number of commercial and apartment mortgages taken out has dropped by more than half. Since there are not as many new loans being taken out, fewer loans are being paid off. This, in turn, helps keep the amount of credit out there the same and, in some situations, even makes it grow.

The four most prominent groups of investors are banks and thrifts, federal agencies and government-sponsored enterprises (GSE) portfolios and mortgage-backed securities (MBS), life insurance companies, and commercial mortgage-backed securities (CMBS), collateralized debt obligation (CDO) and other asset-backed securities (ABS) issues.

At $1.8 trillion, business banks still hold 38% of commercial and multifamily mortgages, which is the most. With $971 billion, Agency, GSE, and MBS portfolios and MBS are the second-biggest holders of business and multifamily mortgages (21 per cent). Life insurance companies have $692 billion, which is 15% of the total. CMBS, CDO, and other ABS issues have $593 billion, which is 13%. CMBS, CDO, and other ABS issues are bought and held by many life insurance companies, banks, and GSEs. The report puts these loans in a section called "CMBS, CDO, and other ABS."

MBA's analysis is a summary of the loans or the form of the security if the loans are securitized. For example, many life insurance companies invest in both whole loans (for which they hold the mortgage note) and CMBS, CDOs, and other ABS issues (for which the security issuers and trustees hold the note), which are listed here under CMBS, CDOs, and other ABS issues.

Mortgage debt for more than one property

Only looking at multifamily mortgages in the second quarter of 2023, agency and GSE portfolios and MBS hold $971 billion (48 per cent) of the total multifamily debt. This is followed by banks and thrifts with $600 billion (30 per cent), life insurance companies with $219 billion (11 per cent), state and local governments with $114 billion (6 per cent), and CMBS, CDO and other ABS issues with $65 billion (3 per cent).

Changes in the amount of commercial and multifamily mortgage debt

In the second quarter, business and multifamily mortgage debt held by banks and thrifts grew by $13.9 billion, or 0.8%, more than any other type of debt. The holdings of agencies, GSE portfolios, and MBS grew by $13.4 billion (1.4%), holdings of life insurance companies grew by $12.0 billion (1.8%), and holdings of non-financial corporate businesses grew by $1.5 billion (5.3%).

In terms of percentages, the amount of business and multifamily mortgages held by state and local government retirement funds went up by 10.3 per cent. On the other hand, the holdings of financial companies went down by 2.2%.

Changes in the amount of outstanding multifamily mortgage debt

Multifamily mortgage debt increased by $26.4 billion from the first quarter of 2023 to the second quarter. This is a quarterly rise of 1.3%. In terms of dollars, agency and GSE portfolios and MBS issues saw the most significant increase in the value of their apartment mortgage debt holdings: $13.4 billion (1.4%). The holdings of banks and thrifts went up by $7.2 billion, or 1.2%. The holdings of life insurance companies went up by $4.3 billion, or 2%.

The amount of apartment mortgage debt held by state and local government retirement funds grew by 10.3 per cent, which was the most of any group. The amount of apartment mortgage debt held by CMBS, CDO, and other ABS issues fell the most, by 0.5%.