How does this impact commercial real estate recovery?
Commercial mortgage delinquencies rose across all major capital sources in the third quarter of 2024, according to the latest Commercial Delinquency Report from the Mortgage Bankers Association (MBA).
“The share of the balance of delinquent commercial mortgages increased for every major capital source during the third quarter of 2024,” said Jamie Woodwell, head of commercial real estate research at MBA. “The increases varied by capital source and were driven by the particularities of each individual loan and property. Stresses differ by property type and subtype, geographic market and submarket, loan type and vintage, borrower type and more.”
The MBA report analyzed delinquency rates for five major investor groups that hold more than 80% of commercial mortgage debt, including banks and thrifts, CMBS, life insurance companies, and government-sponsored entities such as Fannie Mae and Freddie Mac. Each group reported increases in delinquencies, reflecting broader economic pressures and property-specific issues.
The highest delinquency rate was observed in CMBS loans, which rose to 5.15%, up 0.33% from the previous quarter. Life insurance company portfolios reported one of the lowest rates, at 0.46%, but still saw a slight uptick of 0.03%.
Banks and thrifts saw their delinquency rate climb to 1.24%, driven by longer-term challenges with loan performance. Meanwhile, Fannie Mae and Freddie Mac reported delinquency rates of 0.56% and 0.39%, respectively.
Read next: Commercial real estate turmoil puts regional banks under pressure
MBA noted that construction and development loans, often backed by single-family residential projects, were excluded from the report but are included in broader regulatory definitions of commercial real estate. For banks and thrifts, loans backed by owner-occupied commercial properties are part of the delinquency data.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
