For eighth straight quarter, CMBS loan delinquency rates drop: MBA

Most commercial and multifamily loan-delinquency rates remained near record lows in the third quarter thanks to low mortgage rates and high property values, according to the Mortgage Bankers Association.

"Loans financing commercial and multifamily properties continue to perform very well," Jamie Woodwell, the MBA's vice president of commercial research and economics, said in a press release. "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."

Delinquency rates between groups are not comparable because the MBA uses the standard each investor type employs to track their loan performance.

Loans 30 days late or more and real-estate owned backing commercial mortgage-backed securities had a third quarter delinquency rate of 2.29%, down from 3.05% the year before and from 2.46% in the second quarter. CMBS mortgage delinquencies have dropped on a quarterly basis since the second quarter of 2017 and annually since the fourth quarter of 2017. The CMBS delinquency rate resides significantly below the post-housing crisis peak of 8.67% at the end of 2010 but also well above the trough of 0.39% from 2006 and 2007.

Commercial and multifamily mortgages held in bank and thrift portfolios had a 0.45% 90-day-or-more delinquency rate, down from 0.48% one year ago and 0.46% in the second quarter.

When it comes to mortgages held by life companies, the third quarter ended with a 0.03% 60-day or more delinquency rate, inching down from the 0.04% rate seen both the year prior and in 2019's second quarter.

For government-sponsored enterprises, Fannie Mae's 60-day-or-greater multifamily delinquency rate fell to 0.06% from 0.07% a year ago, but was up from the prior quarter's 0.05%. The 60-day-plus delinquency rate for Freddie Mac's multifamily portfolio rose to 0.04% from 0.01% year-over-year and to 0.03% quarter-over-quarter.