MBA: Commercial Delinquencies Down Overall, Still High for Lodging, Retail

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According to the Mortgage Bankers Association’s (MBA) latest monthly MBA CREF Loan Performance Survey, delinquency rates for mortgages backed by commercial and multifamily properties declined in October – the second straight month of loan performance improvement.

“Commercial and multifamily mortgage performance improved in October, but there continues to be evidence of elevated stress, especially among loans backed by retail and lodging properties,” says Jamie Woodwell, MBA’s vice president of commercial real estate research. “The share of loans becoming newly delinquent fell again in October, but a larger share of non-current loans shifted to later-stage delinquencies. In essence, fewer loans are becoming delinquent, but those that are delinquent show fewer signs of curing.”

In October, 94.6% of outstanding loan balances were current, up from 94.3% in September.

In terms of delinquency:

  • 3.4% were 90+ days delinquent or in REO, down from 3.5% a month earlier
  • 0.6% were 60-90 days delinquent (unchanged from September)
  • 0.6% were 30-60 days delinquent, down from 0.7%
  • 0.7% were less than 30 days delinquent, down from 0.9%

Loans backed by lodging and retail properties continue to see the greatest stress, with a higher share of non-current loan balances entering late-stage delinquency. The overall share of lodging and retail loan balances that are delinquent fell again in October (21% and 12.0%, respectively).

Non-current rates for other property types were more moderate – and generally falling:

  • 2.6% of the balances of industrial property loans were non-current, down from 2.7% in September
  • 2.0% of the balances of office property loans were non-current, down from 2.1%
  • 1.6% of multifamily balances were non-current, down from 1.7%

Because of the concentration of hotel and retail loans, CMBS loan delinquency rates are higher than other capital sources, but they also declined for the second straight month: 9.9% of CMBS loan balances were non-current in October, down from 10.9% in September

Non-current rates for other capital sources were more moderate – and generally falling:

  • 2.4% of FHA multifamily and healthcare loan balances were non-current, down from 2.6% in September
  • 1.8% of life company loan balances were non-current, down from 1.9% in September
  • 1.3% of GSE loan balances were non-current – flat from September

For more information from the survey, click here.

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