Commercial delinquencies should remain low despite economic worry: MBA

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Commercial and multifamily mortgage delinquency rates should stay at historically low levels in the near future even as economic uncertainty over trade affects U.S. businesses, according to the Mortgage Bankers Association.

"The strong economy, low interest rates and liquid finance markets are all contributing to delinquency rates that are at or near record lows for commercial and multifamily mortgage loans," Jamie Woodwell, the MBA's vice president of commercial research and economics, said in a press release. "Despite uncertainty on many economic fronts, it is hard to identify factors that would dramatically change the delinquency rate picture in the near term."

Because the MBA uses the standard each investor type employs to track loan performance, delinquency rates are not comparable from one group to another.

Only commercial mortgage-backed security delinquencies are not at historically low levels, but even they are still well below their peak.

Loans 30 days late or more and real estate owned backing CMBS had a 2.46% delinquency rate in the second quarter, down from 2.61% in the first quarter and 3.52% for the same period last year.

While the CMBS delinquency rate is substantially below the year-end 2010 peak of 8.67%, it is also well above the year-end low for both 2006 and 2007 of 0.39%.

Still, CMBS mortgage delinquencies are down on a quarter-to-quarter basis for each period since the second quarter of 2017.

For mortgages held by life companies, the second quarter ended with a 0.04% 60-day or more delinquency rate, unchanged from the first quarter and slightly higher than the 0.03% rate for the second quarter of 2018.

Commercial and multifamily mortgages held in bank and thrift portfolios had a 0.46% 90-day-or-more delinquency rate, down from 0.48% for the first quarter and 0.5% one year ago.

When it comes to the government-sponsored enterprises, Fannie Mae's 60-day-or-greater multifamily delinquency rate was 0.05%, down from 0.07% for the prior quarter and 0.1% for the second quarter of 2018.

The 60-day-plus delinquency rate for Freddie Mac's multifamily portfolio was unchanged from the first quarter at 0.03%, but was up from 0.01% for the second quarter of 2018.

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Delinquencies Distressed Commercial mortgages CRE CMBS GSEs Multifamily Mortgage Bankers Association Fannie Mae Freddie Mac