WASHINGTON, D.C. (June 6, 2023) — Commercial and multifamily mortgage delinquencies increased in the first quarter of 2023, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Delinquency Report.
MBA’s quarterly analysis looks at commercial/multifamily delinquency rates for the five largest investor groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac. These groups hold over 80 percent of commercial/multifamily mortgage debt outstanding. MBA’s analysis incorporates the measures each individual investor group uses to track their loans' performance. Because each investor group follows delinquencies in its way, delinquency rates are not comparable from one group to another. For example, Fannie Mae reports loans receiving payment forbearance as delinquent, while Freddie Mac excludes those loans if the borrower complies with the forbearance agreement.
“Ongoing stress caused by higher interest rates, uncertainty around property values, and questions about fundamentals in some property markets are beginning to show up in commercial mortgage delinquency rates,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Delinquency rates increased for every major capital source during the first quarter, foreshadowing additional strains likely to work their way through the system.”
Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the first quarter of 2023 were as follows:
- Banks and thrifts (90 or more days delinquent or in non-accrual): 0.58 percent, an increase of 0.13 percentage points from the fourth quarter of 2022;
- Life company portfolios (60 or more days delinquent): 0.21 percent, an increase of 0.10 percentage points from the fourth quarter of 2022;
- Fannie Mae (60 or more days delinquent): 0.35 percent, an increase of 0.11 percentage points from the fourth quarter of 2022;
- Freddie Mac (60 or more days delinquent): 0.13 percent, an increase of 0.01 percentage points from the fourth quarter of 2022; and
- CMBS (30 or more days delinquent or in REO): 3.00 percent, an increase of 0.10 percentage points from the fourth quarter of 2022.
Construction and development loans are generally not included in the numbers presented in this report. Still, they are included in many regulatory definitions of ‘commercial real estate’ even though they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers, or other income-producing properties. As a result, the FDIC delinquency rates for bank and thrift-held mortgages reported here include loans backed by owner-occupied commercial properties. Differences between the delinquency measures are detailed in Appendix A.
To download the current report, visit: https://www.mba.org/news-and-research/research-and-economics/commercial-multifamily-research/commercial-multifamily-mortgage-delinquency-rates.