MBA: 2Q Commercial/Multifamily Delinquencies Remain Low

MBA NewsLink Staff

September 06, 2018


Delinquency rates for commercial and multifamily mortgage loans were relatively flat in the second quarter, according to the Mortgage Bankers Association's latest Commercial/Multifamily Delinquency Report.

"It is hard to overstate how low commercial and multifamily mortgage delinquency rates are today," said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. "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."

MBA said delinquency rates for each group at the end of the second quarter, based on the unpaid principal balance of loans, 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;

--Life company portfolios (60 or more days delinquent): 0.03 percent, an increase of 0.01 percentage points from the first quarter;

--Fannie Mae (60 or more days delinquent): 0.10 percent, a decrease of 0.03 percentage points from the first quarter;

--Freddie Mac (60 or more days delinquent): 0.01 percent, a decrease of 0.01 from the first quarter;

--Commercial Mortgage-Backed Securities (30 or more days delinquent or in REO): 3.52 percent, a decrease of 0.41 percentage points from the first quarter.

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

The analysis incorporates 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 that 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 Federal Deposit Insurance Corp. 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.

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