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Commercial Mortgage Delinquencies in U.S. Dip in September

Commercial Mortgage Delinquencies in U.S. Dip in September

According to the Mortgage Bankers Association's latest monthly MBA CREF Loan Performance Survey, U.S. delinquency rates for mortgages backed by commercial and multifamily properties declined in September 2020.

"Commercial and multifamily mortgage performance has stabilized, and in many cases, has begun to slowly improve since the initial stress of April and May," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Lodging and retail properties felt the onset of the recession most immediately and dramatically, and that continues to show in the numbers. Delinquency rates remain more muted among other property types and overall, the inflow of newly delinquent loans has slowed to one-fourth the rate seen in April."

Key U.S. Commercial Loan Performance Survey for September 2020:  

The share of commercial and multifamily loan balances that were current increased in September, rising to 94.3% from 93.6% in August, with fewer new loans becoming delinquent.

  • The share of loans that are 90+ days delinquent rose slightly: from 2.9% to 3.0%.
  • The share of loans that are 60-90 days delinquent held steady at 0.6%.
  • The share of loans that are 30-60 days delinquent fell from 0.8% to 0.7%.
  • The share of loans less than 30 days delinquent fell from 1.6% to 0.9%.
Delinquency-Status-By-Property-Type-Sep-2020.jpgDespite minor improvements, delinquency rates continue to be elevated in the lodging and retail sectors.

  • 22.1% of the balance of lodging loans was delinquent, down from 23.5% in August.
  • 13.3% of the balance of retail loans was delinquent, down from 15.0% in August.
Among other property types, delinquencies declined in September and remain relatively muted.

  • 4.4% of health care loan balances were delinquent, down from 4.7% in August.
  • 2.7% of industrial loan balances were delinquent, down from 3.4% in August.
  • 2.1% of office loan balances were delinquent, down from 2.4% in August.
  • 1.7% of multifamily loan balances were delinquent, down from 1.9% in August.
Because of the higher concentration of hotel and retail properties, delinquencies of CMBS loans have been more impacted than other capital sources.

  • 10.9% of the balance of CMBS loans was delinquent in September, down from 12.5% in August.
Among other capital sources, delinquency rates held steady in September.

  • 2.6% of FHA loan balances were delinquent, up from 2.4% in August.
  • 1.9% of life company loan balances were delinquent, down from 2.4% in August.
  • 1.3% of GSE loan balances were delinquent (unchanged from August).
The volume of borrower inquiries and requests continued to fall in September.

  • Borrower inquiries represented 0.4% of the outstanding balance of loans, down from 0.7% in August.
  • Requests represented 0.2% (down from 0.4% in August), and executed actions represented 1.0% (down from 1.4% in August).

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