U.S. commercial and multifamily mortgage balances expanded again in the third quarter of 2025, underscoring the resilience of apartment finance even as broader real estate markets contend with economic and capital-market uncertainty.

Outstanding commercial and multifamily mortgage debt rose by $53.4 billion in the quarter, a 1.1% increase, lifting the total to $4.93 trillion, according to the Mortgage Bankers Association's latest quarterly survey. The gains were driven overwhelmingly by multifamily lending, which accounted for more than three-quarters of the increase.

Multifamily mortgage debt climbed $40.3 billion, or 1.8%, to $2.24 trillion by the end of September. Apartment loans now represent roughly 22.5% of all outstanding commercial real estate mortgage debt in the U.S., reflecting the sector's continued appeal to lenders seeking stable cash flows amid volatility in office and other property types.

Government-backed and agency-linked capital once again dominated the market. Portfolios and mortgage-backed securities issued or guaranteed by federal agencies and government-sponsored enterprises posted the largest increase in holdings, rising $27.8 billion during the quarter. Banks and life insurance companies also expanded their exposure, while securitized vehicles such as commercial mortgage-backed securities showed more muted growth.

Commercial banks remain the largest holders of commercial and multifamily mortgages overall, with roughly $1.8 trillion on their balance sheets, representing about 37% of the market. Agency and GSE portfolios and mortgage-backed securities follow with approximately $1.11 trillion, or 23%. Life insurance companies hold about $783 billion, while CMBS, collateralized debt obligations and other asset-backed securities account for roughly $642 billion.

Within the multifamily segment specifically, agency and GSE portfolios and mortgage-backed securities control about half of all outstanding debt, totaling roughly $1.11 trillion. Banks and thrifts hold close to $651 billion, while life insurers account for about $263 billion. Smaller shares are held by state and local governments and by securitized vehicles.

Quarterly growth patterns reinforced the sector's reliance on public and quasi-public capital. Agency and GSE portfolios recorded the fastest growth in percentage terms, expanding holdings by 2.6% in the third quarter. Banks increased their commercial and multifamily mortgage exposure by just under 1%, while life insurers posted gains of about 1.6%. By contrast, real estate investment trusts trimmed their holdings, marking the sharpest decline among major investor groups.

The same dynamic played out in multifamily lending alone. Agencies and GSEs captured the largest dollar increase in apartment debt holdings, followed by banks and life insurers. Outside traditional lenders, nonfinancial corporate borrowers recorded the fastest percentage growth in multifamily mortgage holdings, while state and local government retirement funds reduced exposure modestly.

On an annual basis, total commercial mortgage debt is up about 4% from a year earlier, while multifamily balances have grown nearly 6%, highlighting how apartment finance continues to outpace the broader commercial property market as the industry navigates higher interest rates and uneven demand across property sectors.