Total U.S. Commercial, Multifamily Mortgage Debt Rises to $4.63 Trillion in 2023

According to the Mortgage Bankers Association’s latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report, the level of commercial/multifamily mortgage debt outstanding increased by $37.1 billion (0.8 percent) in the third quarter of 2023.

Total commercial/multifamily mortgage debt outstanding rose to $4.63 trillion at the end of the third quarter. Multifamily mortgage debt alone increased $26.8 billion (1.3 percent) to $2.05 trillion from the second quarter of 2023.

Jamie Woodwell

“The level of commercial mortgage debt outstanding has continued to increase despite a continued pullback in borrowing,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “A decline in sales transaction and refinance volumes has meant less new debt being extended, but it also means that fewer loans are paying off than in many earlier periods. The result is that debt levels continue to rise, but at a pace that is roughly half of what was seen last year.”

The four largest investor groups are: banks and thrifts; federal agency and government sponsored enterprise (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.

Commercial banks continue to hold the largest share (38 percent) of commercial/multifamily mortgages at $1.8 trillion. Agency and GSE portfolios and MBS are the second-largest holders of commercial/multifamily mortgages (21 percent) at $986 billion. Life insurance companies hold $702 billion (15 percent), and CMBS, CDO and other ABS issues hold $593 billion (13 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.

MBA’s analysis summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under Life Insurance Companies) and in CMBS, CDOs and other ABS for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues).

MULTIFAMILY MORTGAGE DEBT OUTSTANDING

Looking solely at multifamily mortgages in the third quarter of 2023, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $986 billion (48 percent), followed by banks and thrifts with $606 billion (30 percent), life insurance companies with $223 billion (11 percent), state and local government with $115 billion (6 percent), and CMBS, CDO and other ABS issues holding $67 billion (3 percent).

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the third quarter, agency and GSE portfolios and MBS saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $15.6 billion (1.6 percent). Life insurance companies increased their holdings by $10.4 billion (1.5 percent), banks and thrifts increased their holdings by $9.5 billion (0.5 percent), and the federal government increased their holdings by $1.9 billion (2.1 percent).

In percentage terms, state and local government retirement funds saw the largest increase – 3.0 percent – in their holdings of commercial/multifamily mortgages. Conversely, finance companies saw their holdings decrease 5.2 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $26.8 billion increase in multifamily mortgage debt outstanding from the second quarter of 2023 represents a quarterly gain of 1.3 percent. In dollar terms, agency and GSE portfolios and MBS issues saw the largest gain – $15.6 billion (1.6 percent) – in their holdings of multifamily mortgage debt. Banks and thrifts increased their holdings by $5.6 billion (0.9 percent, and life insurance companies increased by $4.5 billion (2.0 percent).

Nonfinancial corporate business saw the largest percentage increase in their holdings of multifamily mortgage debt, up 7.1 percent. Finance companies saw the largest decline in their holdings of multifamily mortgage debt at 10.0 percent.