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Apartment Debt Adding Up

The volume of outstanding commercial and multifamily mortgage debt continued to grow in the first quarter, based on a Mortgage Bankers Association (MBA) analysis of Federal Reserve Board Flow of Funds data. There was roughly $2.35 trillion in outstanding commercial/multifamily debt based on the Federal Reserve data. That represents a $55 billion (or 2.4%) increase from the end of 2004. Multifamily mortgage debt outstanding stood at $607 billion at the end of the first quarter, which represented a $7.5 billion (or 1.3%) increase from year-end 2004.

“Like most credit markets, the commercial and multifamily mortgage market has continued to see strong growth,” says Doug Duncan, MBA’s chief economist and senior vice president. “The strong capital flows and the resulting low interest rate environment are signs of the general availability of capital as well as investors’ attraction to these particular markets.”

Commercial banks continue to hold the largest share of commercial/multifamily mortgages, with $1.01 trillion (or 43%) of the total. Commercial mortgage-backed securities (CMBS) pools are the second largest holders of commercial/multifamily mortgages with $44 billion (or 19%) of the total share. The remainder is divided up among life insurance companies and GSE’s such as Fannie Mae, Freddie Mac and Ginnie Mae.

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