Delinquency rates of commercial and multifamily loans unveiled in latest report
Commercial and multifamily delinquency rates stayed low at the end of 2020 despite the rapid rise of mortgage rates in the fourth quarter.
Commercial/multifamily delinquencies for five of the largest investor groups (commercial banks and thrifts, commercial mortgage-backed securities [CMBS], life insurance companies, Fannie Mae and Freddie Mac, remained low in Q4, according to the Mortgage Bankers Association. These groups hold over 80% of commercial/multifamily mortgage debt outstanding.
“There were slight upticks among loans in CMBS, life companies, and banks and decreases for Fannie Mae and Freddie Mac, but overall performance remained positive,” said Jamie Woodwell, head of commercial real estate research at MBA.
Based on the unpaid principal balance of loans, delinquency rates for each group at the end of the fourth quarter were as follows:
- Banks and thrifts (90 or more days delinquent or in non-accrual): 0.45%, up 0.01 percentage points from the third quarter of 2022;
- Life company portfolios (60 or more days delinquent): 0.11%, up 0.02 percentage points from Q3;
- Fannie Mae (60 or more days delinquent): 0.24%, down 0.02 percentage points from Q3;
- Freddie Mac (60 or more days delinquent): 0.12%, down 0.01 percentage points from Q3; and
- CMBS (30 or more days delinquent or in REO): 2.90%, up 0.13 percentage points from the previous quarter.
“It is likely that as higher interest rates and softer property values work through the system this year – prompted by maturing, and adjustable-rate loans – loan performance will adjust,” Woodwell said.
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