Commercial and multifamily delinquencies slip to new pandemic low

Survey shows pockets of distress

Commercial and multifamily delinquencies slip to new pandemic low

Commercial and multifamily mortgage delinquencies fell to a new pandemic low in May, according to the Mortgage Bankers Association.

“Commercial and multifamily mortgage delinquency rates ticked down last month to the lowest level since the onset of the COVID-19 pandemic,” said Jamie Woodwell, vice president of commercial real estate research at MBA. “Pockets of elevated stress remain in loans backed by lodging and retail properties, driven by loans in the later stages of delinquency and foreclosure or REO. Quarterly measures of delinquency rates between last year’s fourth quarter and this year’s first quarter show a drop in distress across nearly every capital source.”

Findings from MBA’s recent survey showed that 95.2% of outstanding loan balances were current, a slight improvement from 95.1% in April. Only 3.1% of commercial and multifamily mortgages remained 90+ delinquent or in REO in May, down from 3.2% the prior month.

By property types, lodging and retail loans continue to experience the greatest stress. Delinquency rate for lodging loans dropped to 20%, while retail loans delinquencies increased to 9.5% month over month. Delinquencies of mortgages backed by most other property types remained low. The share of industrial property loans that were non-current remained unchanged at 1.9%, and the share of office property loans that were delinquent decreased to 2.4% in May.

Delinquency rates among the five largest investor groups were as follows:

• Banks and thrifts (90 or more days delinquent or in non-accrual): 0.80%, down 0.03% from the fourth quarter of 2020;

• Life company portfolios (60 or more days delinquent): 0.10%, down 0.06% from the fourth quarter;

Fannie Mae (60 or more days delinquent): 0.66%, down 0.32% from the fourth quarter;

Freddie Mac (60 or more days delinquent): 0.17%, up 0.01% from the fourth quarter; and

• CMBS (30 or more days delinquent or in REO): 6.30%, down 1.20% from the fourth quarter.