Commercial Mortgage Delinquency Rates Increased in the Second Quarter of 2024
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Commercial mortgage delinquencies increased in the second quarter of 2024, according to the Mortgage Bankers Association’s (MBA) latest Commercial Delinquency Report.
“The delinquency rate for loans backed by commercial real estate increased again in the second quarter,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Delinquency rates increased for bank loans and Freddie Mac loans, as well as those held in CMBS. Delinquency rates decreased for loans held by life companies and were unchanged for Fannie Mae.”
Woodwell continued, “The greatest focus continues to be on office loans, which make up about $740 billion of the $4.7 trillion of commercial mortgage debt outstanding. The CRE market is large and diverse, with significant differences by property type and subtype, market and submarket, borrower, lender, vintage, and more. All of those differences come into play in terms of how an individual loan may perform.”
MBA’s quarterly analysis looks at commercial delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac. Together, these groups hold more than 80% of commercial mortgage debt outstanding. MBA’s analysis incorporates the 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. As an example, Fannie Mae reports loans receiving payment forbearance as delinquent, while Freddie Mac excludes those loans if the borrower is in compliance with the forbearance agreement.
Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the second quarter of 2024 were as follows:
• Banks and thrifts (90 or more days delinquent or in non-accrual): 1.15%, an increase of 0.12 percentage points from the first quarter of 2024;
• Life company portfolios (60 or more days delinquent): 0.43%, a decrease of 0.09 percentage points from the first quarter of 2024;
• Fannie Mae (60 or more days delinquent): 0.44%, unchanged from the first quarter of 2024;
• Freddie Mac (60 or more days delinquent): 0.38%, an increase of 0.04 percentage points from the first quarter of 2024; and
• CMBS (30 or more days delinquent or in REO): 4.82%, an increase of 0.47 percentage points from the first quarter of 2024.
Construction and development loans are generally not included in the numbers presented in this report 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 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 download current report go to: https://www.mba.org/news-and-research/research-and-economics/commercial-multifamily-research/commercial-multifamily-mortgage-delinquency-rates.
In addition to this report, MBA works with its servicer members to develop the CREF Loan Performance Survey each quarter. For more information on the most recent results and the historical series go to: https://www.mba.org/home/product/commercial-multifamily-loan-performance-survey-73258.
