MBA says it’s “hard to overstate” how low they are
The levels of delinquencies in commercial and multifamily mortgage loans remained low in the second quarter of 2018, thanks to strong economic fundamentals.
"It is hard to overstate how low commercial and multifamily mortgage delinquency rates are today," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.
In the MBA’s analysis of the five largest investor groups - commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae, and Freddie Mac – delinquencies remained relatively flat in Q2 2018.
"Only three-one-hundredths of one percent (0.03%) of the balance of commercial and multifamily mortgages held by life insurance companies is delinquent, as is one-one-hundredth of one percent (0.01%) of the balance of multifamily mortgages held by Freddie Mac,” explained Woodwell.
He added that 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," concluded Woodwell.
How each group ended the quarter
Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the second quarter were:
- Banks and thrifts (90 or more days delinquent or in non-accrual): 0.50%, a decrease of 0.01 from the first quarter of 2018;
- Life company portfolios (60 or more days delinquent): 0.03%, an increase of 0.01 percentage points from the first quarter of 2018;
- Fannie Mae (60 or more days delinquent): 0.10%, a decrease of 0.03 percentage points from the first quarter of 2018;
- Freddie Mac (60 or more days delinquent): 0.01%, a decrease of 0.01 from the first quarter of 2018;
- CMBS (30 or more days delinquent or in REO): 3.52%, a decrease of 0.41 percentage points from the first quarter of 2018;
The 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.
