Are commercial, multifamily mortgages still performing well?

MBA report sees continued improvement

Are commercial, multifamily mortgages still performing well?

The balance of commercial and multifamily mortgages that are delinquent declined slightly in the fourth quarter of 2021, the Mortgage Bankers Association reported Wednesday.

MBA’s latest CREF Loan Performance Survey showed that 97% of outstanding commercial and multifamily loan balances were current in Q4, up from 96.7% at the end of Q3.

“The fourth quarter saw continued improvement in the performance of commercial and multifamily mortgages, particularly among property types that were the most impacted by the downturn,” said Jamie Woodwell, vice president of commercial real estate research at MBA.

Read next: Freddie Mac delivers outlook for multifamily investment

The share of mortgages becoming newly delinquent was the lowest since the onset of the pandemic, down to 0.7% from 0.8% quarter over quarter. Loan balances that were 90+ days delinquent or in REO also dropped from 2.2% in the third quarter to 1.9% in the fourth quarter.

“The share of outstanding balances that are delinquent fell for both lodging and retail properties, as property owners and lenders and servicers continue to work through troubled deals,” Woodwell said.

Delinquency rates among property types were as follows:

  • 10.5% of the balance of lodging loans was delinquent, down from 14.0% at the end of the third quarter of 2021.
  • 7.6% of the balance of retail loan balances were delinquent, down from 8.2% three months earlier.
  • 2.1% of the balances of industrial property loans were delinquent, up from 1.8% three months earlier.
  • 1.8% of the balances of office property loans were delinquent, unchanged from three months earlier.
  • 1.4% of multifamily balances were delinquent, up from 1.3% three months earlier.

Delinquency rates among capital sources were as follows:

  • 5.7% of CMBS loan balances were non-current, down from 7.2% in last year’s third quarter.
  • 2.2% of FHA multifamily and health care loan balances were non-current, up from 2.0% three months earlier.
  • 1.6% of life company loan balances were non-current, up from 1.2% three months earlier.
  • 0.6% of GSE loan balances were non-current, unchanged from three months earlier.