MBA: First Quarter Commercial/Multifamily Delinquencies Remain Low

Delinquency rates for commercial and multifamily mortgage loans were flat or decreased in the first quarter, the Mortgage Bankers Association reported.

“Delinquency rates for commercial and multifamily mortgages remained at or near record lows for most capital sources during the first quarter,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “Growth in property incomes and property values, coupled with low interest rates have facilitated financing.”

Woodwell noted that as the end of the second quarter approaches, the industry has largely worked through the so-called ‘wave of maturities’.”

The MBA Commercial/Multifamily Delinquency Report examined 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 equaled:
— Banks and thrifts (90 or more days delinquent or in non-accrual): 0.56 percent, a 0.04 percentage point decrease from the fourth quarter;
— Life company portfolios (60 or more days delinquent): 0.02 percent, a 0.02 percentage point decrease from the fourth quarter;
— Fannie Mae (60 or more days delinquent): 0.05 percent, unchanged from the fourth quarter;
— Freddie Mac (60 or more days delinquent): 0.03 percent, unchanged from the fourth quarter;
— CMBS (30 or more days delinquent or in REO): 4.45 percent, a 0.08 percentage point decrease from prior quarter.

The analysis incorporated the measures used by each individual investor group to track loan performance. 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.

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