Anecdotally, the perception may be that lenders in the commercial mortgage arena are tightening the purse strings; however, the hard numbers suggest otherwise.
Data issued last week by the Mortgage Bankers Association show that total commercial/multifamily debt outstanding rose to $3.01 trillion at the end of the first quarter, marking the first time it has broken the $3-trillion mark. Moreover, the level of outstanding commercial/multifamily mortgage debt rose by $37.6 billion during the first quarter, a 1.3% increase over the fourth quarter of 2016.
Related: Life Insurers Swap Liquidity for Yield)
How does this increase compare to what the industry has seen in the past couple of years? On both a percentage and dollar basis, the first quarter of 2017 comes in behind the first quarter of 2015, where the increase over the previous quarter was $40.4 billion, a gain of 1.5%. However, it outpaces the year-ago period, where the quarter-over-quarter increase was $35.3 billion above the fourth quarter of 2015, a 1.2% increase.
"The amount of commercial and multifamily mortgage debt outstanding continued to grow during the first quarter," says Jamie Woodwell, the Mortgage Bankers Association's vice president of commercial real estate research. "Almost two-thirds of the growth came from increases in multifamily mortgage debt outstanding, and 80% of that growth came from portfolios and [mortgage-backed securities] held or guaranteed by federal government agencies and the [government-sponsored enterprises]." Specifically, MBA data show that multifamily mortgage debt outstanding rose to $1.17 trillion, an increase of $23.4 billion, or 2.9%, from Q4 '16.
However, Woodwell says, "Recent releases from the Federal Reserve show that during the second quarter of 2017, bank multifamily portfolios stopped growing and remain relatively flat, while their holdings of other commercial property loans have continued to grow." Even so, the dollar volume of banks' originations across the property-type spectrum in the first quarter—the quarter saw these lenders increase their outstanding commercial/multifamily debt by $24.6 billion, compared to $18.9 billion in the same quarter two years ago and $26.4 billion a year ago—demonstrates that they're keeping pace.
Aside from banks, the second largest lending class by dollar volume was federal agency and government-sponsored enterprise portfolios and mortgage-backed securities, which increased their holdings by $18.9 billion, or 3.6%. Life insurance companies increased their holdings by $10.3 billion, or 2.4%. Commercial mortgage-backed securities, collateralized debt obligations and other asset-backed securities issues saw the largest decrease by dollar volume at $21.3 billion, down 4.6%.
