WASHINGTON, DC—Commercial mortgage debt reached a record high in the third quarter of 2014, and has kept climbing ever since. Led by multifamily originations, outstanding debt stood at $2.68 trillion at the end of the first quarter, the Mortgage Bankers Association said Tuesday.

As a measure of the commercial real estate sector's improving performance, MBA said earlier this month that delinquencies are continuing to head south. That's occurring even as the volume of debt continues to go north.

Now at just under $1 trillion, or slightly more than one-third the total, multifamily mortgage debt outstanding rose 2.1% during Q1, compared to a 1.4% increase for commercial mortgage debt overall. “Multifamily mortgages continued to grow even more quickly than the market as a whole, with banks increasing their portfolios by $8 billion and agency and GSE portfolios and MBS increasing their holdings by $10 billion,” says Jamie Woodwell, MBA's VP of commercial real estate research.

Although agencies may have increased their multifamily mortgage holdings by a larger dollar amount, commercial banks slightly edged out these entities in terms of percentage: a 2.7% increase during Q1, compared to 2.4% for agency and GSE portfolios. Even larger was the quarter-to-quarter increase by state and local governments, at 4.4%, according to MBA.

At the other end of the spectrum, CMBS, CDO and other ABS issues saw the largest quarterly decline by dollars in their holdings of multifamily mortgage debt, by $2.1 billion, or a 2.8% decline. Private pension funds saw the biggest percentage decrease at 4%.

Banks and thrifts saw the largest Q1 dollar increase in their holdings of all commercial mortgage debt. The sector originated $18.4 billion during the quarter, adding 1.9% to their total commercial mortgage holdings. Life insurance companies increased their holdings by $5.2 billion, or 1.4%.

Insurers other than life companies saw the largest percentage increase—5%—in their holdings of commercial/multifamily mortgages. In terms of decreases during Q1, private pension funds saw the largest quarterly drop in both dollars and percentage at $728 million, a decrease of 4%.

For all but Fannie Mae, the news was good when it came to commercial/multifamily mortgage delinquencies during Q1. Life company portfolios experienced a decrease of 0.02 percentage points in mortgages delinquent for 60 or more days, ending Q1 with a late-pay rate of 0.06%. Freddie Mac saw a smaller percentage decrease (0.01 percentage points) but also a lower delinquency rate to begin with (0.03%, also for 60 days or more).

For banks and thrifts, Q1 meant a decline of 0.11 percentage points in mortgages that were 90 or more days delinquent, while for CMBS the quarter represented a drop of 0.19 percentage points for loans that were 30 days past due. CMBS still maintains the highest delinquency rate, though: 5.17% at the end of Q1, compared to 1.03% for banks. Fannie once again ended the quarter with a delinquency rate two digits to the right of a decimal point, but that late-pay rate of 0.09% for loans 60 days past due represented an increase of 0.04 percentage points.

“Commercial and multifamily mortgage performance continues to improve,” Woodwell says. “Increasing property incomes, rising property values and a strong finance market are working together to push delinquency rates lower.”