Commercial mortgage delinquencies increased in the fourth quarter, with the exception of life company loans, which showed a slight decrease, according to the Mortgage Bankers Association’s (MBA) Commercial Delinquency Report.
As of the end of the quarter, banks and thrifts (90 or more days delinquent or in non-accrual) had a delinquency rate of 1.26%, an increase of 0.02 percentage points from the third quarter.
Life company portfolios (60 or more days delinquent) had a delinquency rate of 0.43%, a decrease of 0.03 percentage points from the third quarter.
Fannie Mae (60 or more days delinquent) commercial loans had a delinquency rate of 0.57%, an increase of 0.01 percentage points from the third quarter.
Freddie Mac (60 or more days delinquent) commercial loans had a delinquency rate of 0.40%, an increase of 0.01 percentage points from the third quarter.
CMBS (30 or more days delinquent or in REO) had a delinquency rate of 5.78%, an increase of 0.63 percentage points from the third quarter.
“Even with certain market challenges such as low occupancy rates and the uncertain impact of return-to-office mandates in the office market, and oversupply in the multifamily property market, [commercial mortgage] delinquency rates remain relatively low from a historical perspective,” says Mike Fratantoni, senior vice president and chief economist for the BA, in the report.
“MBA estimates that almost a trillion dollars’ worth of loans are maturing in 2025, and these maturities, coupled with more challenging economic conditions and rangebound interest rates, may result in some further increases in delinquencies if borrowers cannot successfully refinance these loans,” Fratantoni adds.
MBA’s quarterly analysis looks at commercial delinquency rates for the top five capital sources: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac. Together, these investors hold more than 80% of commercial mortgage debt outstanding.
MBA’s analysis incorporates the measures used by each capital source to track the performance of their loans. Because each tracks delinquencies in its own way, delinquency rates are not directly comparable from one group to another.
As an example, Fannie Mae reports loans receiving payment forbearance as delinquent, while Freddie Mac excludes those loans if the borrower is in compliance with the forbearance agreement.
