Commercial and Multifamily Mortgage Delinquency Rates Increased Slightly in Third-Quarter 2023
Delinquency rates for mortgages backed by commercial and multifamily properties increased during the third quarter of 2023, according to the Mortgage Bankers Association's (MBA) latest commercial real estate finance (CREF) Loan Performance Survey.
"The delinquency rate for loans backed by commercial properties has now increased for four consecutive quarters," said Jamie Woodwell, MBA's Head of Commercial Real Estate Research. "The delinquency rate for loans backed by office properties now exceeds those of loans backed by retail and hotel properties, while the delinquency rates for multifamily and industrial property loans remain below one percent.”
Woodwell continued, “Commercial property markets are working through challenges stemming from uncertainty about some properties’ fundamentals, a lack of transparency into where current property values are, and higher and volatile interest rates. The result has been a slow and steady uptick in delinquency rates, concentrated among loans facing more of those challenges.”
The balance of commercial and multifamily mortgages that are not current increased in September 2023 (compared to June 2023).
97.3% of outstanding loan balances were current or less than 30 days late at the end of the third quarter, down from 97.7% at the end of the second quarter of 2023.
2.2% were 90+ days delinquent or in REO, up from 1.7% the previous quarter.
0.2% were 60-90 days delinquent, unchanged from the previous quarter.
0.3% were 30-60 days delinquent, down from 0.4%.
Loans backed by office properties drove the increase.
5.1% of the balance of office property loans were delinquent, up from 4.0% at the end of last quarter.
5.0% of the balance of retail loan balances were delinquent, up from 4.9%.
4.9% of the balance of lodging loans were 30 days or more delinquent, down from 5.3%.
0.9% of multifamily balances were delinquent, up from 0.7%.
0.6% of the balance of industrial property loans were delinquent, down from 0.8%.
Among capital sources, CMBS loan delinquency rates saw the highest levels.
4.4% of CMBS loan balances were 30 days or more delinquent, up from 4.1% last quarter.
Non-current rates for other capital sources remained more moderate.
0.8% of FHA multifamily and health care loan balances were 30 days or more delinquent, unchanged from last quarter.
0.7% of life company loan balances were delinquent, up from 0.4%.
0.4% of GSE loan balances were delinquent, up from 0.3%.
MBA's CREF Loan Performance survey collected information on commercial and multifamily mortgage portfolios as of September 30, 2023. This month's results build on similar surveys conducted since April 2020. Participants reported on $2.7 trillion of loans in September 2023, representing 58 percent of the total $4.6 trillion in commercial and multifamily mortgage debt outstanding (MDO).