MBA: 3Q Commercial/Multifamily Mortgage Delinquencies Stay Low
Commercial and multifamily mortgage delinquencies remained low in the third quarter, according to the Mortgage Bankers Association’s quarterly Commercial/Multifamily Delinquency Report.
“Loans financing commercial and multifamily properties continue to perform very well,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research. “Delinquency rates are at or near record lows for nearly every capital source, with the rate for commercial mortgages held by banks at its lowest since the inception of the series 25 years ago. Solid property fundamentals, strong property values and low interest rates are all helping to keep delinquencies down.”
The MBA quarterly 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 third quarter were as follows:
• Banks and thrifts (90 or more days delinquent or in non-accrual): 0.45 percent, a decrease of 0.01 percentage points from the second quarter;
• Life company portfolios (60 or more days delinquent): 0.03 percent, a decrease of 0.01 from the second quarter;
• Fannie Mae (60 or more days delinquent): 0.06 percent, an increase of 0.01 percentage points from the second quarter;
• Freddie Mac (60 or more days delinquent): 0.04 percent, an increase of 0.01 from the second quarter; and
• CMBS (30 or more days delinquent or in REO): 2.29 percent, a decrease of 0.17 percentage points from the second quarter.
The MBA analysis incorporates measures used by each individual investor group to track the performance of their loans. 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 generally not included in the numbers presented here, but are included in many regulatory definitions of “commercial real estate” despite that 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 FDIC 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/3Q19CMFDelinquency.pdf.