Commercial and multifamily delinquencies hover near record low

Low interest rates due to coronavirus concerns continue to support the market

Commercial and multifamily delinquencies hover near record low

Commercial and multifamily mortgage closed 2019 at or near record low delinquency rates, according to the Mortgage Bankers Association's latest Commercial/Multifamily Delinquency Report.

"The key drivers – solid property fundamentals, strong property values and low-interest rates – continue to support the market," said Jamie Woodwell, vice president of commercial real estate research at MBA.

Three of the five largest investor groups, which hold more than 80% of outstanding commercial and multifamily mortgage debt, saw a slight drop in their share of the unpaid principal balance at the end of Q4 2019.

Banks and thrifts (90 or more days delinquent or in non-accrual) dipped 0.03 percentage points to 0.42% quarter over quarter.

Fannie Mae (60 or more days delinquent) fell 0.02 percentage points from the third quarter to 0.04% in the fourth quarter.

CMBS (30 or more days delinquent or in REO) posted a 0.22 percentage point-decrease to 2.07% in Q4 2019.

Meanwhile, life company portfolios (60 or more days delinquent) and Freddie Mac (60 or more days delinquent) reported quarter-over-quarter increases of 0.01 and 0.04 percentage points to 0.04% and 0.08%, respectively.

"It is too early to tell if and how concerns tied to the coronavirus and the related global slowdown will affect commercial real estate loan performance, but the corresponding drop in financing costs are providing additional near-term support," Woodwell said.