Delinquency rates for commercial and multifamily mortgages held by banks and thrifts in the fourth quarter of 2017 were the lowest they’ve been since at least 1990, according to the Mortgage Bankers Association’s Commercial/Multifamily Delinquency Report.
The report analyzed commercial/multifamily delinquency rates among five of the largest investor groups. The report shows that the percentage of bank-or thrift-held commercial and multifamily mortgage loans 90 or more days delinquent or in non-accrual was 0.51 percent in the fourth quarter, a decrease of 0.02 percentage points from the previous quarter.
“Commercial and multifamily mortgages ended 2017 continuing to perform extraordinarily well,” MBA Vice President of Commercial Real Estate Research Jamie Woodwell said in the report. “The market tailwinds of strong fundamentals, increasing property values and ready access to mortgage and other credit all put downward pressure on delinquency rates.”
Among commercial mortgage-backed securities (CMBS) analyzed in the report, 4.08 percent were delinquent by 30 or more days or real-estate owned (REO) for the fourth quarter, a decrease of 0.52 percentage points from the third quarter.
In addition to delinquency rates among banks, thrifts and CMBS, the MBA analysis also examined commercial/multifamily delinquency rates for life insurance companies and the government-sponsored enterprises. Those groups combined hold more than 80 percent of commercial/multifamily mortgage debt outstanding.
Based on the unpaid principal balance of loans, delinquency rates for the following groups at the end of the fourth quarter were:
- Fannie Mae (60 or more days delinquent): 0.11 percent, an increase of 0.08 percentage points from the third quarter;
- Freddie Mac (60 or more days delinquent): 0.02 percent, unchanged from the third quarter;
- Life company portfolios (60 or more days delinquent): 0.03 percent, an increase of 0.01 percentage points from the third quarter.
The analysis incorporates measures used by each individual investor group to track performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.
Construction and development loans were not included in the report. However, they 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 report noted. Federal Deposit Insurance Corp. delinquency rates for bank-and thrift-held mortgages included in the report include loans backed by owner-occupied commercial properties.