Delinquency rates for commercial and multifamily mortgage loans continued to decline in the fourth quarter of 2013, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. During the fourth quarter of 2013, the 60+ day delinquency rate for commercial and multifamily mortgages held in life company portfolios decreased 0.01 percentage points to 0.05 percent. The 60+ day delinquency rate for multifamily loans held or insured by Freddie Mac increased 0.04 percentage points to 0.09 percent. The 60+ day delinquency rate for multifamily loans held or insured by Fannie Mae decreased 0.08 percentage points to 0.10 percent. The 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.25 percentage points to 1.70 percent. The 30+ day delinquency rate for loans held in commercial mortgage-backed securities (CMBS) decreased 0.66 percentage points to 6.97 percent.
“Rising property incomes and values continue to boost the performance of commercial and multifamily mortgage loans,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Commercial and multifamily mortgages performed relatively well during the downturn, and for most investor groups delinquency rates are now back in the lower end of their historical range.”
The Q4 delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.48 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 6.72 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 3.52 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 4.88 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 2.05 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 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: 0.05 percent (60 or more days delinquent)
►Freddie Mac: 0.09 percent (60 or more days delinquent)
►Fannie Mae: 0.10 percent (60 or more days delinquent)
►Banks and thrifts: 1.70 percent (90 or more days delinquent or in non-accrual)
►CMBS: 6.97 percent (30 or more days delinquent or in REO)
