MBA: First Quarter Commercial/Multifamily Delinquencies Flat
Delinquency rates for commercial and multifamily mortgage loans held steady in the first quarter, the Mortgage Bankers Association reported this morning.
The MBA quarterly Commercial/Multifamily Delinquency Report said delinquency rates for banks and thrifts, life company portfolios, Fannie Mae and Freddie Mac were virtually unchanged from the fourth quarter, which MBA Vice President of Commercial Real Estate Research Jamie Woodwell attributed to strong property fundamentals.
“Mortgages backed by commercial and multifamily properties continue to perform extremely well.” Woodwell said. “Delinquency rates are at or near their all-time lows across most capital sources. This continues to be driven by strong property fundamentals, increasing property values, still-low mortgage rates and readily available financing.”
The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, Fannie Mae and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.
Based on the unpaid principal balance of loans, delinquency rates for each group at the end of the first quarter were as follows:
–Banks and thrifts (90 or more days delinquent or in non-accrual): 0.51 percent, unchanged from the fourth quarter;
–Life company portfolios (60 or more days delinquent): 0.02 percent, a decrease of 0.01 percentage points from the fourth quarter;
Fannie Mae (60 or more days delinquent): 0.13 percent, an increase of 0.02 percentage points from the fourth quarter;
–Freddie Mac (60 or more days delinquent): 0.02 percent, unchanged from the fourth quarter;
–CMBS (30 or more days delinquent or in REO): 3.93 percent, a decrease of 0.15 percentage points from the fourth quarter.
The analysis incorporates the measures used by each individual investor group to track the performance of their loans. MBA said because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.
Construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of ‘commercial real estate’ despite the fact they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers, or other income-producing properties. The Federal Deposit Insurance Corp. delinquency rates for bank and thrift held mortgages reported here do include loans backed by owner-occupied commercial properties.
Differences between the delinquencies measures are detailed in Appendix A.
To view the report, click https://www.mba.org/Documents/Research/1Q18CMFDelinquency.pdf.