Commercial/multifamily debt up 1.5% in Q3

The level of outstanding mortgage debt backed by commercial and multifamily properties grew by $57.0 billion from the second quarter of 2020 to the third, the Mortgage Bankers Association (MBA) reported.

That’s a quarterly increase of 1.5%, bringing total commercial/multifamily debt to $3.82 trillion at the end of the third quarter. Multifamily mortgage debt alone rose $31.0 billion to reach $1.6 trillion in the third quarter, a quarterly increase of 1.9%.

It’s the 33rd consecutive quarter of commercial/multifamily debt growth, noted Jamie Woodwell, vice president for commercial real estate research at the MBA. The purchase market continues to struggle, although refinances have help buoy the sectors.

“Despite a significant fall-off in acquisition financing in in the last two quarters, loan refinancings, particularly for FHA, Fannie Mae, Freddie Mac and bank balance sheets, helped lift total mortgage balances,” Woodwell said. “Continued uncertainty about the pandemic’s long-term impacts is likely to weigh on new financing in the coming quarters.

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“However, positive news about vaccines reflects a light at the end of tunnel regarding the pandemic.”

Commercial banks remain holders of the largest share of commercial/multifamily loans at $1.5 trillion (39% of debt) in the third quarter, with holdings up by $12.1 billion (0.8%) during that time. Federal agency and government-sponsored enterprise (GSE) portfolios and mortgage-backed securities (MBS) were next with $798 billion (21%), though their holdings increased by $23.2 billion (3.0%) in the third quarter, the largest quarterly gain in dollar terms.

In percentage terms, real estate investment trusts (REITs) posted the highest growth during Q3, with a 5.6% increase in holdings. On the flipside, the federal government saw the largest decrease, with its holdings down 2.0%.


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