United States Commercial Mortgage Debt Increases in Q1 2024

By Katie Borchetta · June 24, 2024

The Mortgage Bankers Association (MBA) reports a significant rise in U.S. commercial and multifamily mortgage debt, which reached $4.70 trillion by the end of the first quarter of 2024. This marks an increase of $40.1 billion, or 0.9%, from the previous quarter.

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According to the MBA’s quarterly report, multifamily mortgage debt alone surged by $23.7 billion, or 1.1%, bringing the total to $2.10 trillion.

According to Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research,  the growth increase occurred despite a slowdown in the mortgage originations, with every major capital source increasing their holdings of mortgages, in contrast to fewer loans being paid off through either property sales or refinancing.

Key Investor Groups and Their Holdings

The report highlights the four largest investor groups in commercial and multifamily mortgage debt:

  • Commercial Banks: Holding the largest share at $1.8 trillion, which accounts for 38% of the total debt.
  • Federal Agency and Government Sponsored Enterprise (GSE) Portfolios and Mortgage-Backed Securities (MBS): The second-largest group, holding $1.01 trillion or 22%.
  • Life Insurance Companies: With $720 billion, representing 15%.
  • Commercial Mortgage-Backed Securities (CMBS), Collateralized Debt Obligation (CDO), and other Asset-Backed Securities (ABS): Holding $604 billion, or 13% of the total.

The MBA report also notes that life insurance companies, banks, and GSEs often invest in CMBS, CDO, and other ABS issues, which are categorized under “CMBS, CDO, and other ABS” in the report.

Multifamily Mortgage Debt Breakdown

Focusing on multifamily mortgage debt, the report identifies the primary holders:

  • Federal Agency and GSE Portfolios and MBS: Dominating with $1.01 billion, making up 48% of the total multifamily debt.
  • Banks and Thrifts: Holding $620 billion, or 30%.
  • Life Insurance Companies: With $230 billion, accounting for 11%.
  • State and Local Government: Holding $117 billion, or 6%.
  • CMBS, CDO, and other ABS: At $67 billion, making up 3%.

Changes in Commercial and Multifamily Mortgage Debt

In the first quarter, different investor groups experienced varying levels of increase in their holdings:

  • Banks and Thrifts: Saw the largest dollar increase, adding $12.8 billion, a 0.7% rise.
  • CMBS, CDO, and other ABS: Increased by $11.0 billion, or 1.9%.
  • Agency and GSE Portfolios and MBS: Grew by $10.2 billion, a 1.0% rise.
  • Life Insurance Companies: Expanded their holdings by $7.0 billion, or 1.0%.

On the percentage side, CMBS, CDO, and other ABS issues had the largest increase at 1.9%, while state and local government retirement funds saw a decrease of 8.3%.

Multifamily Mortgage Debt Changes

Multifamily mortgage debt saw notable increases:

  • Agency and GSE Portfolios and MBS: Increased by $10.2 billion, or 1.0%.
  • Banks and Thrifts: Rose by $9.1 billion, or 1.5%.
  • Life Insurance Companies: Grew by $3.8 billion, or 1.7%.

Nonfinancial corporate businesses recorded the highest percentage increase in multifamily mortgage debt at 3.2%, whereas Real Estate Investment Trusts (REITs) experienced the largest decline at 9.7%.

Overall, the MBA’s report underscores a robust growth in commercial and multifamily mortgage debt, reflecting ongoing investment interest despite slower mortgage origination activities.