Commercial mortgage delinquencies lower as economy improves

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Commercial and multifamily fourth-quarter mortgage delinquency rates improved for most investor types compared to one year prior as the U.S. economy continued its recovery.

Across the board, delinquency rates in each group were well below their respective peaks in 2011 or 2012.

"Commercial and multifamily mortgages ended 2017 continuing to perform extraordinarily well," Jamie Woodwell, the MBA's vice president of commercial real estate research, said in a press release. "The market tailwinds of strong fundamentals, increasing property values and ready access to mortgage and other credit all put downward pressure on delinquency rates."

The MBA aggregates delinquency rates for five investor groups that hold more than 80% of the commercial and multifamily debt outstanding. However, because the sources for the data measure delinquencies differently, the information is not comparable across the groups.

The largest year-over-year improvement in delinquencies was for loans included in commercial mortgage-backed securities, at 4.08% with payments which were 30 days or more late, including those loans in real estate owned status. This was 45 basis points lower than the 4.53% delinquency rate in the fourth quarter of 2016.

Fannie Mae was the only investor type that had an increase in loans that were 60 days or more delinquent compared to the fourth quarter of 2016, a rise of 6 basis points to 0.11%. This is the highest fourth-quarter delinquency rate since 2012.

There was a 1-basis-point year-over-year drop at Freddie Mac, to 0.02%.

For commercial and multifamily loans held by banks and thrifts, the 90-day delinquency rate was at 0.51%, down 9 basis points from the previous year.

Life insurers reported that 0.03% of their commercial and multifamily mortgage investments were 60 days delinquent, down 1 basis point from the fourth quarter of 2016.

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Delinquencies Mortgage defaults REO CRE Multifamily CMBS Mortgage Bankers Association Fannie Mae Freddie Mac