Commercial/Multifamily Mortgage Delinquencies at Historic Low

Delinquency rates on commercial and multifamily mortgages stayed nearly historic lows during the third quarter, the Mortgage Bankers Association reported.  “Commercial and multifamily mortgage delinquency rates are extremely low right now,” MBA Vice President for Commercial Real Estate Research Jamie Woodwell said.

CMBS loans that are at least 30 days late or real estate owned fell 47 basis points to 3.05% in the third quarter.  In the second quarter, CMBS loans had a 3.52% delinquency rate, while in the third quarter last year the rate was 4.6%. At its most recent peak in the second quarter of 2017, the delinquency rate was 4.84%.

According to Woodwell, the delinquency rate for loans held on bank balance sheets hit a new series low, while delinquency rates for loans held by life companies or those guaranteed by Fannie Mae and Freddie Mac are all still below 10 basis points.

Broken down by loan type, delinquency rates for each group at the end of the third quarter were:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.48%, a decrease of 0.02 percentage points from 2Q
  • Life company portfolios (60 or more days delinquent): 0.04%, an increase of 0.01 percentage point from 2Q
  • Fannie Mae (60 or more days delinquent): 0.07%, a decrease of 0.03 percentage points from 2Q
  • Freddie Mac (60 or more days delinquent): 0.01%, unchanged from 2Q
  • Commercial mortgage-backed securities (30 or more days delinquent or in REO): 3.05%, a decrease of 0.47 percentage points from 2Q

In the report, Woodwell explained that loans held in CMBS have a higher “headline” delinquency rate due to the way the industry reports on those loans.  “However, when excluding loans in foreclosure or REO – which are generally omitted from the calculations for the other groups – the CMBS delinquency rate is just 45 basis points, the same level as December 2005,” Woodwell added.

Source:  MBA/Housing Wire/National Mortgage News