MBA: Commercial and Multifamily Mortgage Delinquency Rates Increased in Fourth Quarter 2023

Commercial mortgage delinquencies increased in the fourth quarter of 2023, according to the Mortgage Bankers Association’s latest Commercial Delinquency Report.

“Commercial mortgage delinquency rates rose again during the fourth quarter of 2023,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Every major capital source has seen an increase over the last six months, as higher interest rates, uncertainty about property values, and challenges in some property fundamentals work their way through the markets.”

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 fourth quarter of 2023 were as follows:

• Banks and thrifts (90 or more days delinquent or in non-accrual): 0.94%, an increase of 0.09 percentage points from the third quarter of 2023;
• Life company portfolios (60 or more days delinquent): 0.36%, an increase of 0.04 percentage points from the third quarter of 2023;
• Fannie Mae (60 or more days delinquent): 0.46%, a decrease of 0.08 percentage points from the third quarter of 2023;
• Freddie Mac (60 or more days delinquent): 0.28%, an increase of 0.04 percentage points from the third quarter of 2023; and
• CMBS (30 or more days delinquent or in REO): 4.30%, an increase of 0.04 percentage points from the third quarter of 2023.

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.

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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, visit: