Delinquency rates for mortgages backed by commercial properties declined slightly during the second quarter, according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance (CREF) Loan Performance Survey.
“The delinquency rate for most property types declined last quarter, with the exception of loans backed by office properties, which experienced an increase,” says Jamie Woodwell, head of commercial real estate research for the MBA, in a statement. “Even so, the pace of increase in the delinquency rate for office property loans appears to have slowed in recent quarters.
“Commercial properties are working through changes in interest rates, property values, and the fundamentals of some properties,” Woodwell adds. “Each property and loan faces a unique mix of conditions depending on that property’s type and subtype, market and submarket, owner, vintage, deal terms and more. As more loans mature throughout the year, more properties will be adjusting to these new conditions.”
As per the report, 97.0% of outstanding commercial loan balances were current or less than 30 days late at the end of the quarter, up from 96.8% in the first quarter of 2024.
About 2.5% were 90+ days delinquent or in REO, unchanged from the previous quarter.
About 0.2% were 60-90 days delinquent, down from 0.3% the previous quarter.
And about 0.4% were 30-60 days delinquent, unchanged from the previous quarter.
The share of loans that were delinquent increased for office properties and decreased for other property types.
Photo: Étienne Beauregard-RiverinHire
