Multifamily Debt Outstanding Goes Up, Alongside Renter Interest

With single-family home sales lagging and more households struggling with debt issues, the ""Mortgage Bankers Association"":http://mbaa.org/default.htm (MBA) alleviated few concerns about the industry with news Thursday that mortgage debt outstanding for commercial and multifamily properties rose half a percentage point to hit $2.4 trillion over the second quarter this year. Multifamily mortgage originations are typically those used to finance new rental purchases.

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The trade group signaled a roughly $4-billion thrust upward in debt outstanding for commercial and multifamily loans, reflecting a $3.9-billion uptick in debt outstanding from the first quarter.

Total multifamily mortgage debt outstanding: $802 billion.

""For the first time in a year-and-a-half, new commercial and multifamily mortgage originations outpaced the paying off and paying down of existing loans,"" Jamie Woodwell, VP of commercial real estate research for the MBA, said in a ""statement"":http://www.mortgagebankers.org/NewsandMedia/PressCenter/77967.htm. ""Increases in the balance of mortgages held and insured by life insurance companies, Fannie Mae, Freddie Mac and FHA outpaced declines among banks and thrifts and CMBS issues.""

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The MBA said that it developed the analysis by culling information about loan holdings and securities around the market.

The loans in this study included mortgage notes, commercial mortgage-backed securities (CMBS), debt obligations backed by collateral, and securities backed by assets.

The figures for these loans reflect those for apartment complexes, retail outlets, office buildings, and others that require fees from rents and leases to pay their overhead, the trade group said.

Some $792 billion, or over 30 percent, of the total mortgage debt outstanding for CMBS rounds out to $617 billion, or just over one-quarter, of commercial and multifamily debt held by issuers of the securities, according to the MBA.

The rise in debt outstanding for multifamily loans parallels industry-wide concerns that more potential U.S. homebuyers will stay on the sidelines in favor of rental properties.

A recent ""_Reuters_"":http://www.reuters.com/article/2011/08/16/us-usa-housing-idUSTRE77943O20110816 story quoted ""Morgan Stanley"":http://www.morganstanley.com/ as saying in a report that the ""combination of falling home prices, limited mortgage credit, continued liquidations and better rental options is fundamentally changing the way Americans live.""

Speaking to _MReport_ for a ""past story"":https://themreport.com/articles/whats-killing-american-dream-of-homeownership-2011-08-17, Walter Molony, a spokesperson with the ""National Association of Realtors"":http://www.realtor.org/, faulted ""tight credit"" for the rush by more Americans to apartments.

He said that a crunch in FICO scores and tighter rules for creditworthiness leave more buyers out of the market, keeping a ""stronger housing market"" to heel as a result.