Commercial mortgage delinquencies up again

Increases observed across every major capital source

Commercial mortgage delinquencies up again

Commercial mortgage delinquency rates rose again in the final quarter of 2023, according to new data from the Mortgage Bankers Association (MBA).

Jamie Woodwell, MBA’s head of commercial real estate research, said the increase was observed across every major capital source amid “higher interest rates, uncertainty about property values, and challenges in some property fundamentals.”

The latest quarterly report from MBA revealed varied increases among five of the largest investor groups, namely commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and the government-sponsored enterprises Fannie Mae and Freddie Mac.

Banks and thrifts had a delinquency rate of 0.94%, up by 0.09 percentage points from the third quarter.

Life insurance company portfolios experienced a smaller uptick, with delinquencies rising by 0.04 percentage points to 0.36%.

CMBS delinquencies also rose by 0.04 percentage points to 4.30%.

Conversely, Fannie Mae reported a decrease in delinquencies, with rates falling to 0.46%, down 0.08 percentage points from the previous quarter. However, Freddie Mac saw delinquency rates increase by 0.04 percentage points to 0.28%.

MBA said these five investor groups account for over 80% of the commercial mortgage debt outstanding.

Additionally, each group utilizes different methods for tracking loan performance, leading to variations in how delinquencies are reported.

The increases seen in the fourth quarter also continued an upward trend from the previous quarter, according to MBA.

In the third quarter report released in late 2023, the association revealed that commercial mortgage delinquencies had gone up for a third consecutive quarter.

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