Commercial mortgage debt increases to begin 2012

Commercial mortgage debt rose during the first quarter.

The Mortgage Bankers Association recently reported that some property management companies may have dealt with a larger amount of outstanding mortgage debt having taken out more loans during the first quarter of 2012.

Overall, outstanding commercial and multifamily mortgage debt rose $8.1 billion during the month, which was 0.3 percent higher than the fourth quarter's figure, the report explained. The total for the first quarter was $2.37 trillion. The multifamily market witnessed a total figure of $818 billion, which was 0.8 percent – or $6.9 billion – higher than the previous quarter.

"The amount of commercial and multifamily mortgage debt outstanding increased during the first quarter, as lenders put out more in new loans than paid-off or paid down," said Jamie Woodwell, vice president of commercial real estate research at the Mortgage Bankers Association. "Banks; Fannie Mae, Freddie Mac and FHA; and life insurance companies all increased their holdings of commercial and multifamily mortgages, more than offsetting declines among CMBS and other investor groups."

Commercial banks still had the largest portion of these commercial and multifamily mortgage debts, as the total was $808 billion during the first quarter, the report noted. This figure was 34 percent of all commercial and multifamily loans.

The second tier of holders for these loans was commercial mortgage-backed securities, collateralized debt obligations and asset backed securities, according to the report. The total for the first quarter was $575 billion, which was 24 percent of the entire figure.

When examining multifamily mortgages, the report explained that 43 percent, or $352 billion of total mortgage debt was held by government-sponsored enterprises, other government agencies and mortgage-backed securities. In addition, financial institutions had 27 percent of the total figure, with $221 billion. CMBS, CDOs and ABS had 11 percent, for a total of $88 billion. Furthermore, state and local governments were responsible for 8 percent, or 8 percent. Life insurance companies and the federal government rounded out the list, with 6 percent or $50 billion, and 2 percent and $14 billion, respectively.

With continued increases in multifamily starts, it is natural for outstanding debt for mortgage loans to increase. This is another sign that the multifamily market is getting stronger and property management companies have been able to receive loans to continue growth.

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