The most recent Commercial Delinquency Report from the Mortgage Bankers Association (MBA) shows that commercial mortgage delinquencies rose in the third quarter of 2024.
“The share of the balance of delinquent commercial mortgages increased for every major capital source during the third quarter of 2024,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “The increases varied by capital source and were driven by the particularities of each individual loan and property. Stresses differ by property type and subtype, geographic market and submarket, loan type and vintage, borrower type and more.”
Business delinquency rates for five of the biggest investor groups—commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac—are examined in MBA’s quarterly analysis. These groups collectively own almost 80 percent of the outstanding debt from commercial mortgages.
The metrics that each distinct investor group uses to monitor the success of their loans are taken into account in MBA’s study. Delinquency rates are not comparable across investor groups since each group measures delinquencies differently. For instance, Freddie Mac does not include loans that are in payment forbearance provided the borrower is adhering to the forbearance arrangement, but Fannie Mae classifies such loans as delinquent.
At the conclusion of the third quarter of 2024, the delinquency rates for each group were as follows, based on the unpaid principle balance (UPB) of loans:
- Banks and thrifts (90 or more days delinquent or in non-accrual): 1.24%, an increase of 0.09 percentage points from the second quarter of 2024;
- Life company portfolios (60 or more days delinquent): 0.46%, an increase of 0.03 percentage points from the second quarter of 2024;
- Fannie Mae (60 or more days delinquent): 0.56%, an increase of 0.12 percentage points from the second quarter of 2024;
- Freddie Mac (60 or more days delinquent): 0.39%, an increase of 0.01 percentage points from the second quarter of 2024; and
- CMBS (30 or more days delinquent or in REO): 5.15%, an increase of 0.33 percentage points from the second quarter of 2024.
Although construction and development loans are frequently supported by single-family residential development projects rather than office buildings, apartment buildings, shopping malls, or other income-producing properties, they are typically not included in the figures provided in this report but are included in many regulatory definitions of “commercial real estate.”
Loans secured by owner-occupied commercial properties are included in the FDIC delinquency rates for bank and thrift-held mortgages that are presented here. “Appendix A” provides specifics on how the delinquencies measurements differ from one another.
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