First Quarter Commercial/Multifamily Delinquencies Remain Low

CONTACT
Ali Ahmad
aahmad@mba.org
(202) 557- 2727

WASHINGTON, D.C. (January 30, 2015) - WASHINGTON, D.C. (June 1, 2017)- Delinquency rates for commercial and multifamily mortgage loans were flat or decreased in the first quarter of 2017, according to the Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report.

"Delinquency rates for commercial and multifamily mortgages remained at or near record lows for most capital sources during the first quarter," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Growth in property incomes and property values, coupled with low interest rates, have facilitated financing. As we near the end of the second quarter, the industry has largely worked through the so-called 'wave of maturities'."

The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae, and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.

Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the first quarter were as follows:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.56 percent, a decrease of 0.04 percentage points from the fourth quarter of 2016;
  • Life company portfolios (60 or more days delinquent): 0.02 percent, a decrease of 0.02 percentage points from the fourth quarter of 2016;
  • Fannie Mae (60 or more days delinquent): 0.05 percent, unchanged from the fourth quarter of 2016.
  • Freddie Mac (60 or more days delinquent): 0.03 percent, unchanged from third quarter of 2016;
  • CMBS (30 or more days delinquent or in REO): 4.45 percent, a decrease of 0.08 percentage points from the fourth quarter of 2016;
  • The 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.

Construction and development loans are not included in the numbers presented here, 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 view the report, click here.