MBA: January Commercial, Multifamily Mortgage Delinquencies Decrease

Delinquency rates for mortgages backed by commercial and multifamily properties decreased in January, according to the Mortgage Bankers Association’s latest monthly MBA CREF Loan Performance Survey.

“The stress in commercial mortgages continues to be concentrated among the property types that have been most directly and immediately impacted by the pandemic, most notably lodging and retail properties,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research. “Among some other property types, including office and multifamily, overall delinquency rates remain lower, but have climbed slightly in recent months. While MBA is forecasting for a strong economic rebound in the second half of this year, as a rapid roll-out of vaccines and continued government fiscal assistance to households and businesses provide support for the market, there still remains a heightened sense of uncertainty about the months ahead.”

The survey was developed to better understand the ways the COVID-19 pandemic is impacting commercial mortgage loan performance.

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

The balance of commercial and multifamily mortgages that are not current decreased in January, driven by fewer loans becoming newly delinquent.

  • 94.3% of outstanding loan balances were current, up from 94.0% in December.
    • 3.6% were 90+ days delinquent or in REO, up from 3.5% a month earlier.
    • 0.3% were 60-90 days delinquent, down from 0.4% a month earlier.
    • 0.6% were 30-60 days delinquent, down from 0.7% a month earlier.
    • 1.2% were less than 30 days delinquent, down from 1.5%.

Loans backed by lodging and retail properties continue to see the greatest stress, but there were slight improvements in January. The overall share of retail, industrial and lodging loan balances that are delinquent decreased.

  • 21.5% of the balance of lodging loans were not current in January, down from 22.5% a month earlier.
    • 11.8% of the balance of retail loan balances were delinquent, down from 11.9% a month earlier.
    • Non-current rates for other property types were lower and mixed during the month.
      • 4.0% of the balances of industrial property loans were non-current, down from 4.2% a month earlier.
      • 3.0% of the balances of office property loans were non-current, up from 2.7%.
      • 1.8% of multifamily balances were non-current, up from 1.7% a month earlier.

Because of the concentration of hotel and retail loans, CMBS loan delinquency rates are higher than other capital sources.

  • 10.0% of CMBS loan balances were non-current, down from 10.5% a month earlier.
    • Non-current rates for other capital sources were more moderate and mixed.
      • 3.2% of FHA multifamily and health care loan balances were non-current, up from 2.6% a month earlier.
      • 2.1% of life company loan balances were non-current, up from 1.9%.
      • 1.2% of GSE loan balances were non-current, down from 1.3% a month earlier.

The MBA CREF Loan Performance survey collected information on commercial and multifamily mortgage portfolios as of January 20. This month’s results build on similar monthly surveys conducted since April. Participants reported on $1.9 trillion of loans in January, representing half of the total $3.8 trillion in commercial and multifamily mortgage debt outstanding.

For more information on the MBA CREF Loan Performance Survey for January, click here.