As the fall home shopping season remains underway, he most recent Commercial Delinquency Report from the Mortgage Bankers Association (MBA) indicates that there was an increase in commercial mortgage delinquencies during the second quarter of 2024.
The commercial delinquency rates of five of the major investor groups—commercial banks and thrifts, life insurance companies, commercial mortgage-backed securities (CMBS), and Fannie Mae and Freddie Mac—are examined in the MBA’s quarterly analysis. Over 80% of outstanding commercial mortgage debt is held by these entities collectively. The metrics employed by each distinct investor group to monitor the performance of their loans are incorporated into MBA’s study.
Delinquency rates are not comparable between investor groups since each one tracks delinquencies differently. For instance, Freddie Mac excludes loans that are in compliance with the terms of the forbearance agreement, but Fannie Mae counts those loans as delinquent.
“The delinquency rate for loans backed by commercial real estate increased again in the second quarter,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Delinquency rates increased for bank loans and Freddie Mac loans, as well as those held in CMBS. Delinquency rates decreased for loans held by life companies and were unchanged for Fannie Mae.”
Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of Q2 of 2024 were as follows:
- Banks and thrifts (90 or more days delinquent or in non-accrual): 1.15%, an increase of 0.12 percentage points from Q1 of 2024;
- Life company portfolios (60 or more days delinquent): 0.43%, a decrease of 0.09 percentage points from Q1 of 2024;
- Fannie Mae (60 or more days delinquent): 0.44%, unchanged from Q1 of 2024;
- Freddie Mac (60 or more days delinquent): 0.38%, an increase of 0.04 percentage points from Q1 of 2024; and
- CMBS (30 or more days delinquent or in REO): 4.82%, an increase of 0.47 percentage points from Q1 of 2024.
“The greatest focus continues to be on office loans, which make up about $740 billion of the $4.7 trillion of commercial mortgage debt outstanding,” Woodwell said. “The CRE market is large and diverse, with significant differences by property type and subtype, market and submarket, borrower, lender, vintage, and more. All of those differences come into play in terms of how an individual loan may perform.”
To read the full report, including more data, charts, and methodology, click here.
