Commercial and Multifamily Mortgage Delinquencies Declined in July

Delinquency rates for mortgages backed by commercial and multifamily properties declined in July, the Mortgage Bankers Association’s latest CREF Loan Performance Survey reported.

MBA developed the survey to better understand the ways the COVID-19 pandemic is affecting commercial mortgage loan performance.

“Commercial and multifamily mortgage delinquencies declined in July, hitting the lowest point since the onset of the pandemic,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research. “Loan performance continues to be very property-type dependent, with lodging loans still the hardest hit but showing strong improvement. Office properties saw a decline in overall delinquencies, but an uptick in loans that are newly delinquent.”

Woodwell noted the strength of the economy should continue to support most property types in the coming months.

Key Findings from MBA’s CREF Loan Performance Survey for July 2021: 

The balance of commercial and multifamily mortgages that are not current declined in July.

  • 95.5% of outstanding loan balances were current, up from 95.2% from a month earlier.
  • 2.9% were 90+ days delinquent or in REO, down from 3.0% a month earlier.
  • 0.2% were 60-90 days delinquent, unchanged from a month earlier.
  • 0.3% were 30-60 days delinquent, down from 0.6% a month earlier.
  • 1.1% were less than 30 days delinquent, unchanged from a month earlier.

Loans backed by lodging and retail properties continue to see the greatest stress, but did show improvement last month.

  • 16.5% of the balance of lodging loans were delinquent, down from 17.6% a month earlier.
  • 9.0% of the balance of retail loan balances were delinquent, down from 10.0% a month earlier.
  • Non-current rates for other property types were at lower levels during the month.
    • 1.8% of the balances of industrial property loans were non-current, down from 3.1% a month earlier.
    • 3.2% of the balances of office property loans were non-current, down from 3.5% a month earlier.
    • 1.5% of multifamily balances were non-current, down from 2.1% a month earlier.

Because of the concentration of hotel and retail loans, commercial mortgage-backed securities loan delinquency rates are higher than other capital sources.

  • 8.2% of CMBS loan balances were non-current, unchanged from a month earlier.
  • Non-current rates for other capital sources were more moderate.
    • 2.8% of FHA multifamily and health care loan balances were non-current, up from 2.7% a month earlier.
    • 1.7% of life company loan balances were non-current, down from 3.2% from a month earlier.
    • 0.9% of GSE loan balances were non-current, down from 1.0% a month earlier.

MBA’s CREF Loan Performance survey collected information on commercial and multifamily mortgage portfolios as of July 20, 2021. This month’s results build on similar monthly surveys conducted since April 2020. Participants reported on $1.8 trillion of loans in July, representing approximately 46% of the total $4 trillion in commercial and multifamily mortgage debt outstanding.

Click here for more information on MBA’s CREF Loan Performance Survey.