MBA: Commercial Mortgage Delinquency Rates Are Still Slow to Improve

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According to the Mortgage Bankers Association’s (MBA) latest monthly CREF Loan Performance Survey, commercial mortgage delinquency rates decreased in April to reach the lowest level since the onset of the COVID-19 pandemic.

Overall, 95.1% of outstanding loan balances were current, up from 95% in March.

Although lower than in past months, the delinquency rate remains stubbornly high by historical standards thanks to hard times in the hotel and retail sectors. Loans backed by lodging and retail properties continue to see the greatest stress, but also the most improvement: 20.2% of the balance of lodging loans were delinquent, down from 20.5% a month earlier, while 9.3% of the balance of retail loan balances were delinquent, down from 9.5% a month earlier.

Among other property types, 1.9% of the balances of industrial property loans were non-current, 2.6% of the balances of office property loans were non-current, and 1.7% of multifamily balances were non-current.

“New and early-stage delinquencies have fallen significantly from earlier in the pandemic, but later-stage delinquency rates have stayed high, as lenders and servicers work through the options for troubled properties,” says Jamie Woodwell, MBA’s vice president of commercial real estate research.

“Vaccine rollouts, strong consumer balance sheets and pent-up demand are all positive signals, both for new delinquencies and for working out troubled properties.”

In April, 3.2% were 90+ days delinquent or in REO, 0.3% were 60-90 days delinquent, 0.4% were 30-60 days delinquent, and 1.1% were less than 30 days delinquent.

The MBA notes that 8.5% of CMBS loan balances were non-current, down from 8.7% a month earlier. Non-current rates for other capital sources were more moderate: 2.1% of FHA multifamily and healthcare loan balances were non-current, 2.0% of life company loan balances were non-current, and 1.1% of GSE loan balances were non-current.

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