Banks up Their Holdings in Commercial/Multifamily Mortgages


Now sitting on $1.46 trillion in such mortgages, or 43% of the market

September 23, 2008

By Beth Braverman – Financial Week

Despite the credit crunch, the level of commercial/multifamily mortgage debt outstanding grew by 1.5% from the first to the second quarter, to $3.44 trillion, according to the Mortgage Bankers Association’s analysis of the Federal Reserve Board’s flow of funds data.

“Fundamentally, the commercial and multifamily mortgages have continued to perform well,” said Jamie Woodwell, the MBA’s vice president of commercial real estate research. “The default rates remain relatively low. Most of these investors tend to hold them to term, so they are less affected by capital markets disruption.”

Investment groups including commercial banks, life insurance companies, thrifts and government-sponsored entities increased their holdings in commercial/multifamily mortgage securities.

Meanwhile, holdings in the commercial mortgage-backed market—the group most affected by the credit crunch—saw their holdings wane.

Commercial banks continue to hold the largest share of commercial/multifamily mortgages, with $1.46 trillion, or 43% of the total.

Life insurance companies hold $313 billion, or 9% of the total, and savings institutions hold $230 billion, or 7% of the total.

The GSE and agency mortgage pools hold $146 billion in multifamily loans that support the mortgage-backed securities they issue, and another $168 billion “whole” loans in their own portfolios, for a total share of 9% of outstanding commercial/multifamily mortgages.



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