Outstanding Commercial Mortgage Arrears Increase In Q1 As Pandemic Eases

Outstanding commercial and multi-unit mortgage debt rose 1.1% in the first quarter, according to the Mortgage Bankers Association, but the housing side of the equation accounted for most of it.

The total outstanding commercial and multi-family debt was $ 3.93 trillion as of March 31, up $ 44.6 billion from the end of 2020. Multi-family debt stood at $ 1.7 trillion at the end of the first quarter, up $ 28.8 billion, or 1.7%, from three months earlier.

March 31, 2020, when pandemic closures affected loan issuance for holiday and retail real estate Initially, there were $ 3.72 trillion in commercial and multi-family debt outstanding, with the multi-family segment accounting for $ 1.6 trillion.

“The the rise of the pandemic era “The volume of outstanding commercial and multi-unit mortgages continued throughout the first quarter, but growth has not been steady,” Jamie Woodwell, MBA vice president of commercial real estate research, said in a press release. Sources increased their holdings of commercial and multi-family mortgages during the quarter, but nearly two-thirds of total growth came from multi-unit real estate, with 80% of this growth in multi-unit houses accounted for by federal agencies and government-funded mortgage-backed securities and portfolios. “

At the end of the first quarter, banks had $ 1.49 trillion in commercial and multi-family mortgages, or 38% of total outstanding loans. That’s slightly above $ 1.48 trillion (38%) as of December 31, 2020 and $ 1.4 trillion (39%) as of March 31, 2020.

But when it comes to outstanding debt on apartment buildings, agency / GSE investors have the largest share – 50% at $ 861 billion. This amount also makes them the second largest investor group overall.

The agency / GSE sector held $ 838 billion in multi-family debt in the fourth quarter and $ 752 billion at the end of the first quarter of 2020.

But GSE’s investment in multi-family mortgages may be limited in the future. regulatory constraints restricting the purchase of these credits.

Life insurers held $ 588 billion as of March 31, up from $ 587 billion in the fourth quarter and $ 572 billion in the first quarter of 2020. Meanwhile, securitizers held $ 540 billion in outstanding debt in the first quarter, up from $ 533 billion in the fourth quarter. and $ 516 billion a year ago.

Even with quarterly and year-over-year growth and the continued opening of the US economy, investors are likely to rethink their position when it comes to providing new funding.

“As the uncertainty surrounding the COVID-19 pandemic eases, lenders will have more clarity about different properties and types of property and will have a stronger position to issue new loans,” Woodwell said.