Commercial and Multifamily Mortgage Delinquencies Remain Low in First Quarter of 2019
WASHINGTON, D.C. (June 10, 2019) - Commercial and multifamily mortgage delinquencies stayed low in the first quarter of 2019, according to the Mortgage Bankers Association's (MBA) latest Commercial/Multifamily Delinquency Report.
"Steady U.S. economic growth continues to support the financing and values of commercial and multifamily properties," said Jamie Woodwell, MBA's Vice President of Commercial Research & Economics. "Commercial/multifamily mortgage delinquencies remain at or near record lows for most capital sources, and it's hard to imagine loans performing better than they currently do. Given the environment, there's little reason to expect a marked deterioration of near-term performance."
MBA's quarterly 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 the 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): 0.48 percent, unchanged from the fourth quarter of 2018;
- Life company portfolios (60 or more days delinquent): 0.04 percent, a decrease of 0.01 percentage points from the fourth quarter of 2018;
- Fannie Mae (60 or more days delinquent): 0.07 percent, an increase of 0.01 percentage points from the fourth quarter of 2018;
- Freddie Mac (60 or more days delinquent): 0.03 percent, an increase of 0.02 percentage points from the fourth quarter of 2018; and
- CMBS (30 or more days delinquent or in REO): 2.61 percent, a decrease of 0.16 percentage points from the fourth quarter of 2018.
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.
Construction and development loans are generally not included in the numbers presented in MBA's 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 of the report. To view the report, please visit: https://www.mba.org/Documents/Research/1Q19CMFDelinquency.pdf.