Loan delinquency rates for both commercial and multifamily mortgage loans remained low during the third quarter of 2016, according to the Mortgage Bankers Association’s (MBA's) Commercial/Multifamily Delinquency Report.
The MBA’s analysis is based on the unpaid principal balance of commercial and multifamily debt held by five of the largest loan investor groups: commercial banks and thrifts, life insurance companies, Fannie Mae, Freddie Mac, and commercial mortgage-backed securities (CMBS). Taken together, they hold more than 80% of commercial and multifamily debt.
For banks and thrifts, 0.62% of loans were either in nonaccrual or 90 or more days delinquent, a 0.04% decrease from the second quarter of this year. For life company portfolios, 0.08% of loans were 60 or more days delinquent, down 0.03% from the second quarter.
Just 0.07% of Fannie Mae’s loans were 60 or more days delinquent, unchanged since the previous quarter, and 0.01% of Freddie Mac’s loans were 60 or more days delinquent, down 0.01%.
CMBS is the only group with a recorded rise in delinquent loans; 4.23% of CMBS loans were in REO or 30 or more days delinquent, up by 0.19% from the second quarter.
“Delinquency rates generally fell, staying near 20-year lows for loans held by banks, life insurance companies and Fannie Mae and Freddie Mac,” said Jamie Woodwell, the MBA’s vice president of commercial real estate research, in the report. “Loans held in commercial mortgage-backed securities were the one major group to see a slight increase in the rate—largely driven by the fact that many of the stronger loans that are set to mature in 2016 and 2017 are paying off, reducing the denominator and leaving behind weaker loans. This trend is likely to continue for the next few quarters.”
In its analysis of loan delinquency rates, the MBA uses the same methods each individual investor uses to track its own loan performance. The delinquency rates are not comparable with one another because each investor group tracks its delinquencies differently.
To view the full report, click here.