Commercial and Multifamily Mortgage Delinquencies Decline to Lowest Level Since the Onset of the Pandemic

CONTACT
Adam DeSanctis
adesanctis@mba.org
(202) 557-2727

WASHINGTON, D.C. (June 3, 2021) - Delinquency rates for mortgages backed by commercial and multifamily properties continue to decline, according to two reports released today by the Mortgage Bankers Association (MBA).

The summary of findings come from MBA's Commercial Real Estate Finance (CREF) Loan Performance Survey for May, and the latest quarterly Commercial/Multifamily Delinquency Report for the first quarter of 2021. The CREF Loan Performance Survey was developed by MBA to better understand the ways the pandemic is impacting commercial mortgage loan performance. MBA's regular quarterly analysis of commercial/multifamily delinquency rates is based on third-party numbers covering each of the major capital sources.  

"Commercial and multifamily mortgage delinquency rates ticked down last month to the lowest level since the onset of the COVID-19 pandemic," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Pockets of elevated stress remain in loans backed by lodging and retail properties, driven by loans in the later-stages of delinquency and foreclosure or REO. Quarterly measures of delinquency rates between last year's fourth quarter and this year's first quarter show a drop in distress across nearly every capital source."

Key Findings from MBA's CREF Loan Performance Survey for May 2021:

Note: The survey includes a range of delinquency measures, but for the purposes of understanding the impacts from the pandemic, any non-current loan is generally treated as delinquent.   

The balance of commercial and multifamily mortgages that are not current decreased again in May to the lowest level since the onset of the pandemic.

  • 95.2% of outstanding loan balances were current, up from 95.1% in April.
  • 3.1% were 90+ days delinquent or in REO, down from 3.2% a month earlier.
  • 0.2% were 60-90 days delinquent, down from 0.3% a month earlier.
  • 0.5% were 30-60 days delinquent, up from 0.4% a month earlier.
  • 1.0% were less than 30 days delinquent, down from 1.1%.

  Loans backed by lodging and retail properties continue to see the greatest stress.

  • 20.0% of the balance of lodging loans were delinquent, down from 20.2% a month earlier.
  • 9.5% of the balance of retail loan balances were delinquent, up from 9.3% a month earlier.
  • Non-current rates for other property types were at lower levels during the month.
  • 1.9% of the balances of industrial property loans were non-current, unchanged from a month earlier.
  • 2.4% of the balances of office property loans were non-current, down from 2.6% a month earlier.
  • 1.8% of multifamily balances were non-current, up from 1.7% a month earlier.

Because of the concentration of hotel and retail loans, CMBS loan delinquency rates are higher than other capital sources.

  • 8.2% of CMBS loan balances were non-current, down from 8.5% a month earlier.
  • Non-current rates for other capital sources were more moderate.
  • 2.4% of FHA multifamily and health care loan balances were non-current, up from 2.1% a month earlier.
  • 2.0% of life company loan balances were non-current, unchanged from a month earlier.
  • 1.2% of GSE loan balances were non-current, up from 1.1% a month earlier.

For more information on MBA's CREF Loan Performance Survey for May 2021, please visit: https://www.mba.org/store/products/research/general/report/commercial-real-estate-finance-loan-performance-survey.

Key Findings from MBA's First Quarter of 2021 Commercial/Multifamily Delinquency Report:

Note: MBA's quarterly report relies on the headline delinquency measures used by each capital source. Each capital source's measure is different. The different measures can give a good indication of delinquency trends within a source but should not be used to compare any one capital source to another.  

Commercial and multifamily mortgage delinquencies decreased in the first quarter of 2021.

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.80 percent, a decrease of 0.03 percentage points from the fourth quarter of 2020;
  • Life company portfolios (60 or more days delinquent): 0.10 percent, a decrease of 0.06 from the fourth quarter;
  • Fannie Mae (60 or more days delinquent): 0.66 percent, a decrease of 0.32 percentage points from the fourth quarter;
  • Freddie Mac (60 or more days delinquent): 0.17 percent, an increase of 0.01 from the fourth quarter; and
  • CMBS (30 or more days delinquent or in REO): 6.30 percent, a decrease of 1.20 percentage points from the fourth quarter. 

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.

Differences between the delinquencies measures are detailed in Appendix A. To view the report, please visit: https://www.mba.org/Documents/Research/1Q21CMFDelinquency.pdf