But the split of growth among different lender types was anything but even. Depending on whether the count is by dollars or percentage, either life insurance companies or the combination of GSEs and mortgage-backed securities were on top. Private pension funds had the biggest drop.
Overall, commercial and multifamily mortgage debt was 3.7% higher at the end of 2024 than in 2023. On a quarter-over-quarter measure, total mortgage debt outstanding was up 1.1% to $4.79 trillion in Q4. Multifamily mortgage debt rose by 1.8%, or $38.9 billion, to $2.16 trillion and by $111.0 billion, or 5.4%, for the year. That would leave $2.63 trillion for commercial.
The split of the outstanding debt pie has stayed reasonably constant over the last five quarters. Reviewing previously reported data since Q4 2023, commercial banks have held about 37% to 38% of the total; agency, GSE, and MBS had 21% to 22%; life insurance had 15% to 16%; and CMBS, CDO, and other ABS issues had about 13%.
Looking at the end of 2024 only, banks and thrifts had 37.6%; agency, GSE, and MBS, 22.2%; life insurance companies, 16.3%; CMBS, CDO, and other ABS issues, 13.1%; state and local governments, 2.3%; nonfinancial corporate business, 2.3%; federal government, 2.1%; and REITs, 1.8%. Then there are another half-dozen types with a collective 2.3% share.
Looking at multifamily only, the largest holder is agency, GSE, and MBS with 49.3% of the debt outstanding by the end of 20204. Banks and thrifts have 29.2%; life insurance companies, 11.8%; state and local governments, 4.2%; CMBS, CDO, and other ABS issues, 3.2%. There are a number of other lender types that make up about 2.5% total together.
However, those are long-established and large total balances, meaning shifts take time to become apparent. Differences are clear in new debt, whether a first origination or refinancing. Agency and GSE portfolios and MBS increased 3.0% by $31.2 billion, and the largest by loan type. Life insurance companies took on another 3.0% or $22.7 billion. CMBS, CDO, and ABS issues increased by 1.0% or $6.4 billion. Federal government increased holdings by $1.2 billion or 1.2%.
“Life insurance companies had the fastest growth in commercial debt outstanding over the past year, accounting for almost 39 percent of the annual increase,” said MBA Senior Vice President and Chief Economist Mike Fratantoni in prepared remarks. “By contrast, bank holdings increased by just 1 percent over the year, with this growth accounting for 10.5 percent of the total increase.”
In multifamily debt, agency, SE, and MBS portfolios saw the highest rise of 3.0% of $31.2 billion, life insurance companies increased their holdings also by 4.2% or $10.2 billion; CMBS, CDO, and other ABS issues were up 3.0% or 282 million or 0.4%; and state and local governments had a $1.6 billion or 1.7% decline.
“For the tenth consecutive quarter, multifamily debt outstanding increased at a faster rate than the overall CREmarket,” Fratantoni said. “Almost 56 percentof the growth in multifamily MDO reflected growth in Agency and GSE portfolios and mortgage-backed securities (MBS).”
The split raises interesting questions. The GSE and agency dominance in multifamily with nearly half suggests a dependence on what is ultimately government-backed financing and raises the question of what might happen at some point if the government-sponsored enterprises are taken out of conservatorship. Even if not, there is the question of what this might do for future market stability and growth. And could the disparity in growth rates between multifamily and commercial ultimately divert funds from other areas of CRE lending?
