MBA: Delinquency Rates for Commercial Property Loans Declined Slightly in Second Quarter of 2024
(Image courtesy of MBA)
Delinquency rates for mortgages backed by commercial properties declined slightly during the second quarter of 2024. This is according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance Loan Performance Survey.
“The delinquency rate for most property types declined last quarter, with the exception of loans backed by office properties, which experienced an increase,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Even so, the pace of increase in the delinquency rate for office property loans appears to have slowed in recent quarters.”
Added Woodwell, “Commercial properties are working through changes in interest rates, property values, and the fundamentals of some properties. Each property and loan faces a unique mix of conditions depending on that property’s type and subtype, market and submarket, owner, vintage, deal terms and more. As more loans mature throughout the year, more properties will be adjusting to these new conditions.”
The balance of commercial mortgages that are not current decreased slightly in the second quarter of 2024.
97.0% of outstanding loan balances were current or less than 30 days late at the end of the quarter, up from 96.8% in the first quarter of 2024.
• 2.5% were 90+ days delinquent or in REO, unchanged from the previous quarter.
• 0.2% were 60-90 days delinquent, down from 0.3% the previous quarter.
• 0.4% were 30-60 days delinquent, unchanged from the previous quarter.
The share of loans that were delinquent increased for office properties and decreased for other property types.
• 7.1% of the balance of office property loan balances were 30 days or more days delinquent, up from 6.8% at the end of last quarter.
• 5.8% of the balance of lodging loans were delinquent, down from 6.3% the previous quarter.
• 4.5% of retail balances were delinquent, down from 4.7%.
• 1.1% of multifamily balances were delinquent, down from 1.2%.
• 0.8% of the balance of industrial property loans were delinquent, down from 1.2%.
Among capital sources, CMBS loan delinquency rates saw the highest levels despite seeing a decrease during the quarter.
• 4.8% of CMBS loan balances were 30 days or more delinquent, down from 5.2% last quarter.
• Non-current rates for other capital sources remained more moderate.
– 0.9% of FHA multifamily and health care loan balances were 30 days or more delinquent, up from 0.8%.
– 1.1% of life company loan balances were delinquent, down from 1.2%.
– 0.4% of GSE loan balances were delinquent, unchanged from the previous quarter.
MBA’s CREF Loan Performance survey collected information on commercial and multifamily mortgage portfolios as of June 30, 2024. This quarter’s results build on similar surveys conducted since April 2020. Participants reported on $2.6 trillion of loans in March 2023, representing 55% of the total $4.7 trillion in commercial and multifamily mortgage debt outstanding (MDO).
For more information on MBA’s CREF Loan Performance Survey, please visit: www.mba.org/store/products/research/general/report/commercial-real-estate-finance-loan-performance-survey.
