Commercial mortgage delinquencies were on the rise during the first quarter, according to data from the Mortgage Bankers Association (MBA).
MBA’s quarterly analysis details the commercial delinquency rates for five of the largest investor groups that hold more than 80% of commercial mortgage debt outstanding. Based on the unpaid principal balance of loans, delinquency rates for each group at the end of the first quarter were as follows:
- Banks and thrifts (90 or more days delinquent or in non-accrual): 1.03%, an increase of 0.09 percentage points from the fourth quarter of 2023;
- Life company portfolios (60 or more days delinquent): 0.52%, an increase of 0.16 percentage points from the fourth quarter of 2023;
- Fannie Mae (60 or more days delinquent): 0.44%, a decrease of 0.02 percentage points from the fourth quarter of 2023;
- Freddie Mac (60 or more days delinquent): 0.34%, an increase of 0.06 percentage points from the fourth quarter of 2023; and
- CMBS (30 or more days delinquent or in REO): 4.35%, an increase of 0.05 percentage points from the fourth quarter of 2023.
Jamie Woodwell, MBA’s head of commercial real estate research, observed, “The increase was seen across most capital sources, pointing to the challenges caused by loans that are maturing amid higher interest rates, uncertain property values, and questions about some properties’ fundamentals. It is important to recognize that different capital sources track delinquencies in different ways – and with good reason. The rise in delinquency rates for commercial mortgages at banks was driven by banks designating non-multifamily loans – in particular, office – as ‘nonaccrual,’ meaning the loan may still be current on payments, but the lender does not expect to be paid in full. The increases in such loans, and the associated net-charge-offs at large banks, can be seen as evidence of the institutions working to get ahead of potential future defaults.”
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