2013 was a "strong year" for both commercial and multi-family debt holdings the Mortgage Bankers Association (MBA) said today and the fourth quarter continued in that vein. The amount of commercial and multi-family mortgage debt outstanding at the end of the year increased by 3.7 percent or $90.5 billion compared to the end of 2012.  Multi-family debt alone increased by $37 billion during the year, an increase of 4.3 percent.

The largest increases in the dollar volume holdings of overall commercial/multi-family debt was with commercial banks and thrifts which expanded theirs by $62 billion or 7.4 percent.  The largest increase on a percentage basis was in the holdings of non-life insurance companies, up 29.9 percent.  Finance companies decreased their holdings by $5 billion or 10.0 percent and state/local government retirement funds had the largest percentage decrease at 29.7 percent. 

 Commercial banks and thrifts also had the largest increase in their holdings of multifamily debt, upping their portfolios by $28.7 billion or 12.2 percent.  REITS recorded the largest increase in percentage terms, 41.1 percent.  Commercial Mortgage-Backed Securities (CMBS), Collateralized Debt Obligations (CDO) and Asset-Backed Securities (ABS) as a group saw a decrease in their holdings of $5.6 billion or 6.9 percent while finance companies had the largest percentage drop of 29.9 percent.

The level of commercial/multifamily mortgage debt outstanding increased by $41.2 billion, or 1.7 percent, in the fourth quarter of 2013, as all four major investor groups increased their holdings.   Multifamily mortgage debt rose to $895 billion, an increase of $11.5 billion, or 1.3 percent, from the third quarter and $36.6 billion, or 4.3 percent, from the fourth quarter of 2012.

Commercial banks and thrifts led in the growth of multi-family holdings as well.  In dollar terms their holdings increased by 10.4 billion or 4.1 percent.  Second was CMBS, CDO and other ABS issues, up by $1.2 billion, or 1.6 percent.  Life insurance companies increased by $434 million, or 0.8 percent.  State and local government retirement funds saw the biggest decrease in their holdings of multifamily mortgage debt, by $451 million, or 17.8 percent.

Commercial banks also recorded the largest increase in holdings of multifamily mortgages in percentage terms, at 4.1 percent.  State and local government retirement funds saw the biggest decrease, at 17.8 percent.

The largest piece of multi-family debt is held by agency and GSE portfolios and MBS with $391 billion, or 44 percent of the total.  Banks and thrifts hold $263 billion, or 29 percent.  CMBS, CDO and other ABS issues and state and local government each hold $75 billion, or 8 percent of the total; life insurance companies hold $53 billion, 6 percent of the total; and the non-farm non-corporate business holds $15 billion, or 2 percent.

In the fourth quarter of 2013, bank and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $28 billion, or 3.2 percent.  CMBS, CDO and other ABS issues increased their holdings of commercial/multifamily mortgages by $11 billion, or 2.1 percent.  Finance companies saw the largest decrease of $2 billion or 3.5 percent.  

In percentage terms, other insurance (non-life) companies recorded the largest increase in holdings of commercial/multifamily mortgages, at 4.4 percent.  State and local government retirement funds saw the biggest decrease, at 17.8 percent.

"During the fourth quarter, commercial and multifamily mortgage debt outstanding reached a new high, erasing the declines caused by the recession," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "Over the course of 2013, banks increased their holdings of commercial and multifamily mortgages by seven percent, and their balance of just multifamily mortgages by more than 12 percent.  Commercial mortgage-backed securities' holdings increased for the first time since 2007, and life insurance companies, the GSEs and FHA each increased their holdings (or guarantees) by more than three percent.  Simply put, it was a strong year."

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 ABS for which the security issuers and trustees hold the note and which appear here under CMBS, CDO and other ABS issues.