Findings from the Mortgage Bankers Association’s monthly commercial real estate loan performance survey and a report on commercial and multifamily delinquency in the second quarter of 2021 showed said delinquencies to be on the decline.
“Delinquency rates for mortgages backed by commercial and multifamily properties have broadly improved in recent months as the U.S. economy continues to heal from the COVID-19 pandemic,” MBA Vice President of Commercial Real Estate Research Jamie Woodwell said in a release. “Performance is still property-type dependent, with the properties that saw the most immediate and dramatic impacts from the pandemic – lodging and retail – still experiencing considerably more stress than others but showing improvement. Delinquency rates are down significantly for those property types and remain muted for others.
“There should be continued downward pressure on delinquency rates as more later-stage delinquencies are worked through,” he added. “What happens with early-stage delinquencies will largely be a function of the broader economy.”
The balance of lodging loans that were delinquent in August 2021 was at 13.4 percent, down from 16.5 percent in July. For office property loans, there was a slight decrease in delinquency month-over-month, with 2 percent of loans being noncurrent in August, compared with 3.2 percent the month before. Other types of loan delinquencies reported include retail loan delinquencies saw a month-over-month decrease from 9 percent to 8.5 percent; industrial property loans dropped from 1.8 percent in July to 1.5 percent in August; and the multifamily noncurrent balance went from 1.5 percent to 1.2 percent.
Overall, 6.9 percent of commercial mortgage-backed securities were noncurrent in August 2021, down from 8.2 percent in July. Noncurrent rates for other capital sources varied: 2 percent of Federal Housing Administration multifamily and health care loan balances were noncurrent, down from 2.8 percent the month before; 1.9 percent of life company loan balances were noncurrent, up from 1.7 percent; and 0.6 percent of government-sponsored enterprise loan balances were noncurrent, down from 0.9 percent.
When looking at loans by the amount of time they have been delinquent, the survey showed 2.2 percent of commercial and multifamily mortgages were over 90 days delinquent or in real estate owned in August, down from 2.9 percent in July; 0.2 percent were 60 days to 90 days delinquent, unchanged month-over-month; 0.3 percent were 30 days to 60 days delinquent, also unchanged month-over-month; and 0.8 percent were less than 30 days delinquent, down from 1.1 percent the month before.