Third Quarter Commercial/Multifamily Delinquencies Remain Low

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Ali Ahmad
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Bank Delinquencies Match Lowest on Record


WASHINGTON, D.C. (November 30, 2017)- Delinquency rates for commercial and multifamily mortgage loans were relatively flat in the third quarter of 2017, according to the Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report.

"It is hard to imagine commercial and multifamily mortgages performing better than they are today," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "The delinquency rate for loans held in bank portfolios matches the lowest ever recorded in the 24 year history of the series. Loans made by life companies, Freddie Mac and Fannie Mae have 60+ day delinquency rates of 0.02 percent, 0.02 percent and 0.03 percent, respectively.  Strong property fundamentals and values, and ready credit availability, are all helping contribute to this extraordinary performance."

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 third quarter were as follows:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.52 percent, a decrease of 0.02 percentage points from the second quarter of 2017; 
  • Life company portfolios (60 or more days delinquent): 0.02 percent, a decrease of 0.02 percentage points from the second quarter of 2017; 
  • Fannie Mae (60 or more days delinquent): 0.04 percent, a decrease of 0.01 percentage points from the second quarter of 2017; 
  • Freddie Mac (60 or more days delinquent): 0.02 percent, an increase of 0.01 percentage points from the second quarter of 2017; 
  • CMBS (30 or more days delinquent or in REO): 4.61 percent, a decrease of 0.23 percentage points from the second quarter of 2017;

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.

The full report can be downloaded here.