Delinquency rates continued to decline for commercial and multifamily mortgage loans in the fourth quarter of 2012, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. “The delinquency rates for commercial and multifamily mortgages dropped again in the fourth quarter,” said Jamie Woodwell, MBA’s VP of Commercial Real Estate Research. “The continued decline is being driven by improving property fundamentals and a strong finance market.”
During the fourth quarter of 2012, the 60+ day delinquency rate for commercial and multifamily mortgages held in life company portfolios decreased 0.04 percentage points to 0.08 percent. The 60+ day delinquency rate for multifamily loans held or insured by Freddie Mac decreased 0.08 percentage points to 0.19 percent. The 60+ day delinquency rate for multifamily loans held or insured by Fannie Mae decreased 0.04 percentage points to 0.24 percent. The 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.32 percentage points to 2.62 percent. The 30+ day delinquency rate for loans held in commercial mortgage-backed securities (CMBS) decreased 0.13 percentage points to 8.73 percent.
The fourth quarter 2012 delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.45 percentage points lower than the series high (7.53 percent, reached during the second quarter of 1992). The delinquency rate for multifamily loans held by Freddie Mac was 6.62 percentage points lower than the series high (6.81 percent, reached in the fourth quarter of 1992). The delinquency rate for multifamily loans held by Fannie Mae was 3.38 percentage points below the series high (3.62 percent, reached during the fourth quarter of 1991). The rate for commercial and multifamily mortgages held by banks and thrifts was 3.96 percentage points lower than the series high (6.58 percent, reached in the second quarter of 1991). The rate for loans held in CMBS was 0.29 percentage points below the series high (9.02 percent, reached in the second quarter of 2011).
Construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of ‘commercial real estate’ despite the fact that they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers or other income-producing properties. The FDIC delinquency rates for bank and thrift held mortgages reported here do include loans backed by owner-occupied commercial properties.
Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the fourth quarter were as follows:
►Life company portfolios: 0.08 percent (60 or more delinquent);
►Freddie Mac: 0.19 percent (60 or more days delinquent);
►Fannie Mae: 0.24 percent (60 or more days delinquent);
►Banks and thrifts: 2.62 percent (90 or more days delinquent or in non-accrual);
►CMBS: 8.73 percent (30 or more days delinquent or in REO).
