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U.S. Commercial, Multifamily Mortgage Delinquencies Remain Low in Q2

U.S. Commercial, Multifamily Mortgage Delinquencies Remain Low in Q2


According to the Mortgage Bankers Association's latest Commercial/Multifamily Delinquency Report, delinquency rates for commercial and multifamily mortgage loans remained low in the second quarter of 2016.

WPJ News | Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research

Jamie Woodwell

"For most capital sources, commercial and multifamily mortgage delinquency rates are near the lowest levels seen during the past 20 years," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "Strong property fundamentals, rising property values and solid mortgage availability are all supporting these rates."

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): 0.66 percent, a decrease of 0.07 from the first quarter of 2016;
  • Life company portfolios (60 or more days delinquent): 0.11 percent, an increase of 0.05 from the first quarter of 2016;
  • Fannie Mae (60 or more days delinquent): 0.07 percent, an increase of 0.01 percentage points from the first quarter of 2016;
  • Freddie Mac (60 or more days delinquent): 0.02 percent, a decrease of 0.02 percentage points from first quarter of 2016;
  • CMBS (30 or more days delinquent or in REO): 4.04 percent, an increase of 0.17 percentage points from the first quarter of 2016.
The analysis incorporates the same 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.

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