Delinquency rates for mortgages backed by commercial and multifamily properties increased during the third quarter, according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance (CREF) Loan Performance Survey.
As per the report, 2.2% of commercial/multifamily loans were 90-plus days delinquent or in REO, up from 1.7% in the second quarter.
About 0.2% were 60-90 days delinquent, unchanged from the previous quarter.
And 0.3% were 30-60 days delinquent, down from 0.4%.
Loans backed by office properties drove the increase.
“The delinquency rate for loans backed by commercial properties has now increased for four consecutive quarters,” says Jamie Woodwell, Head of Commercial Real Estate Research for the MBA, in a statement. “The delinquency rate for loans backed by office properties now exceeds those of loans backed by retail and hotel properties, while the delinquency rates for multifamily and industrial property loans remain below one percent.”
“Commercial property markets are working through challenges stemming from uncertainty about some properties’ fundamentals, a lack of transparency into where current property values are, and higher and volatile interest rates,” Woodwell says. “The result has been a slow and steady uptick in delinquency rates, concentrated among loans facing more of those challenges.”
Photo: Étienne Beauregard-Riverin