The Big Payback: 2016’s Non-Bank Commercial Debt Maturity Spike

English: Mortgage debt

The Mortgage Bankers Association’s combined national numbers for commercial mortgage debt held by non-banks tell an interesting tale. The total dollar amount of maturities has risen a sharp 51% from 2015, meaning more debt will mature – yet the bottom line is that principal balances are increasingly prepaid and paid-down. Michael Gerrity’s piece in World Property Journal spells it out:

“More commercial and multifamily mortgages are maturing in 2016 and 2017 than have the last few years, but early refinancings and pay-downs are chipping away at those totals. The bottom line is that the ‘wall of maturities’ that has been the focus of concern the last many years is receding,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.  “Last year’s survey tracked $225 billion of commercial and multifamily mortgages that were set to mature in 2016.  This year’s survey found that 2016 maturities had dropped by 18 percent, to $183 billion as loans prepaid and paid-down.  That’s roughly the same amount that matured in the year 2010.”

The “wave of maturities” in the space — approximately $350B worth set for the three years 2015-2017 — do suggest that a whole lot of refinancing is expected for those loans needing it.  The specter of rising interest rates means the price of financing may be set on a collision course with the demands of of extra commercial borrowers feeling the pinch.

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