Strong property prices and continued low interest rates keep the sector sturdy
Strong property values and continued low interest rates are keeping the commercial and multifamily sector sturdy, according to the Mortgage Bankers Association. Commercial and multifamily mortgage delinquencies remained at or near record lows in the third quarter, the MBA said in its latest Commercial/Multifamily Delinquency Report.
“Loans financing commercial and multifamily properties continue to perform very well,” said Jamie Woodwell, vice president of commercial real estate research for the MBA. “Delinquency rates are at or near record lows for nearly every capital source, with the rate for commercial mortgages held by banks at its lowest since the inception of the series 25 years ago. Solid property fundamentals, strong property values and low interest rates are all helping to keep delinquencies down.”
The MBA’s analysis scrutinizes commercial and 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 five groups hold more than 80% of outstanding commercial/multifamily debt.
- Delinquency rates for each group at the end of Q3 were as follows:
- Banks and thrifts (90 or more days delinquent or in non-accrual): 0.45%, a decrease of 0.01 percentage points from Q2
- Life company portfolios (60 or more days delinquent): 0.03%, a decrease of 0.01 percentage points from Q2
- Fannie Mae (60 or more days delinquent): 0.06%, an increase of 0.01 from Q2
- Freddie Mac (60 or more days delinquent): 0.04%, an increase of 0.01 from Q2
- CMBS: 2.29%, a decrease of 0.17 from Q2
Construction and development loans are generally not included in the MBA’s numbers.
