$324 Billion Commercial And Multifamily Mortgage Debt Increase In 2022

Mortgage News April 1, 2023

The Mortgage Bankers Association (MBA) reported that by the end of 2022, the commercial and multifamily mortgage debt outstanding had increased by $324 billion compared to the previous year.

The latest report by the MBA on outstanding commercial debt stated that the total combined commercial and multifamily debt reached $4.5 trillion by the end of Q4 2022, reflecting a YoY increase of 7.7%. Additionally, the combined debt increased by $77.9 billion in Q4, marking a quarterly gain of 1.7%.

By the end of 2022, the outstanding multifamily debt alone amounted to $1.96 trillion, indicating an annual increase of $148.2 billion or 8.2%. On a quarterly basis, the debt increased by $35.6 billion or 1.8%.

According to Jamie Woodwell, who is the head of commercial real estate research at the MBA, the outstanding commercial and multifamily mortgage debt experienced significant growth in 2022. The growth rate was the second highest since 2007, with the exception of 2021. Depositories were the primary contributors to this growth, increasing their commercial and multifamily mortgage holdings by 12%. Moreover, almost half of the annual increase can be attributed to the growth in multifamily mortgage balances.

The report states that commercial banks retained the biggest market share of commercial and multifamily mortgages, accounting for 39% (around $1.7 trillion) of the total outstanding debt. In addition, while life insurance companies held 15% ($666 billion), agency and government-sponsored enterprise portfolios, along with mortgage-backed securities, held 21% ($953 billion) of the outstanding debt. The remaining 13% ($603 billion) of the outstanding debt was held by commercial mortgage-backed securities, collateralized debt obligations, and other asset-backed securities.

The report indicates that Real estate investment trusts (REITs), which represent 4% of the total outstanding commercial and multifamily debt, witnessed the highest annual growth in the commercial debt market share at 25.8%. Among the major investor groups, no other group showed an annual growth of more than 12%.

Data from multiple sources including the Federal Reserve Board, the Federal Deposit Insurance Corp., Trepp LLC, and Wells Fargo Securities were used for MBA’s analysis.

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