Q1 2009 Commercial Outstanding Commercial Mortgage Debt Remains Unchanged

The level of commercial and multifamily mortgage debt outstanding remained relatively unchanged in the first quarter of 2009, at $3.48 trillion, according to the Mortgage Bankers Association (MBA) analysis of the Federal Reserve Board Flow of Funds data.

“Banks and Fannie Mae and Freddie Mac all increased their holdings of commercial and multifamily mortgages during the first quarter,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “The relatively long-term nature of commercial real estate finance has meant greater stability in the levels of commercial mortgage debt outstanding than is seen among many other types of credit.”

Commercial banks continue to hold the largest share of commercial/multifamily mortgages—$1.56 trillion or 45 percent of the total. Many of the commercial mortgage loans reported by commercial banks, however, are actually “commercial and industrial loans” to which a piece of commercial property has been pledged as collateral. An MBA Research PolicyNote found that among the top 10 commercial real estate bank lenders, 48 percent of their aggregate balance of commercial (non-multifamily) real estate loans were related to owner-owned properties. The MBA notes that this is the borrower’s business income, not the income derived from the property’s rents and leases, which drive the underwriting, pricing, and performance of these loans.

Since the other loans reported here are generally income property loans, meaning that the income primarily comes from rent, the commercial bank numbers are not comparable.