Multifamily and CRE loan debt sees largest rise since housing bubble

Commercial and multifamily mortgage debt outstanding grew 6.8% in 2018, benefiting from strong employment numbers and strained inventory, according to the Mortgage Bankers Association.

With a tightened housing supply, especially at the low end of the price range, the demand for multifamily rental properties remains high.

There was a $216 billion increase in commercial and multifamily debt outstanding during the year and a $68.5 billion jump in the fourth quarter alone. The combined debt total now sits at $3.39 trillion. The multifamily segment rose to $1.36 trillion, with an increase of $32.2 billion during the quarter.

Multifamily loan debt

The MBA forecasts mortgage banker originations of just multifamily mortgages to rise 1% in 2019 to $264 billion, with total multifamily lending at $315 billion. The expectation should carry over into 2020 as well.

“Last year recorded the largest annual increase in commercial and multifamily mortgage debt outstanding since the Great Recession, and the largest increase in multifamily mortgage debt on record,” Jamie Woodwell, the MBA’s vice president of commercial real estate research, said in a press release.

The GSEs — Fannie Mae and Freddie Mac — along with federal agencies’ holdings had the largest increase in commercial and multifamily mortgage debt outstanding during the fourth quarter, going up by $26.8 billion. Commercial banks followed by rising $21 billion and life insurer holdings grew by $12.4 billion. Conversely, state and local governments decreased the most at $1.2 billion.

“Growth in multifamily mortgage debt made up almost half the total increase in debt outstanding, and Fannie Mae, Freddie Mac and FHA collectively accounted for two-thirds of the multifamily growth. The GSEs, life insurance companies, the CMBS market and banks all increased their holdings of commercial and multifamily mortgage debt during the year,” said Woodwell.

Commercial banks hold $1.34 trillion of commercial and multifamily mortgage debt, followed by the GSEs and federal agencies at $675 billion. Life insurers hold $509 billion, while securitizers hold $466 billion. The remaining $405 billion is held by others, including state and local government retirement funds and agencies.

Paul Centopani

Paul Centopani

Paul Centopani is a reporter for National Mortgage News.

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