Second Quarter Commercial/Multifamily Delinquencies Remain at Low Levels

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

WASHINGTON, D.C. (September 4, 2018) - Delinquency rates for commercial and multifamily mortgage loans were relatively flat in the second quarter of 2018, according to the Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report.

"It is hard to overstate how low commercial and multifamily mortgage delinquency rates are today," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "Only three-one-hundredths of one percent (0.03 percent) of the balance of commercial and multifamily mortgages held by life insurance companies is delinquent, as is one-one-hundredth of one percent (0.01 percent) of the balance of multifamily mortgages held by Freddie Mac.  The delinquency rate for loans held on banks' balance sheets is the lowest in the series history.  Strong property fundamentals and values, coupled with low interest rates and ample financing options, all continue to support commercial real estate owners and their abilities to repay their mortgages."

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 second quarter were as follows:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.50 percent, a decrease of 0.01 from the first quarter of 2018;
  • Life company portfolios (60 or more days delinquent): 0.03 percent, an increase of 0.01 percentage points from the first quarter of 2018;
  • Fannie Mae (60 or more days delinquent): 0.10 percent, a decrease of 0.03 percentage points from the first quarter of 2018;
  • Freddie Mac (60 or more days delinquent): 0.01 percent, a decrease of 0.01 from the first quarter of 2018;
  • CMBS (30 or more days delinquent or in REO): 3.52 percent, a decrease of 0.41 percentage points from the first quarter of 2018;
  • 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, please click here.