Commercial, multifamily delinquency rates decline: MBA
Delinquency rates for commercial and multifamily mortgages continued to decline in the fourth quarter of 2012, according to the Mortgage Bankers Association’s latest delinquency report.
Improving property fundamentals as well as a strong finance market mainly drove the continued decrease, said Jamie Woodwell, vice president of commercial real estate research at the MBA.
Delinquency rates for commercial and multifamily mortgages held in life insurance company portfolios fell 7.45 percentage points from record highs of 7.53% during the second quarter of 1992, MBA said.
Meanwhile, the delinquency rate for multifamily loans held by Freddie Mac fell 6.62 percentage points from highs of 6.81% recorded in the fourth quarter of 1992. Additionally, the delinquency rate for multifamily loans held by Fannie Mae declined 3.38 percentage points from a series high of 3.62% recorded in the fourth quarter of 1991.
The rate for commercial and multifamily mortgages held by banks as well as thrifts was 3.96 percentage points lower than the series high of 6.58% in 2Q of 1991, MBA added.
Furthermore, the rate for loans held in commercial mortgage-backed securitizations was 0.29 percentage points below the series high of 9.02% in the second quarter of 2011, MBA stated.
The MBA analysis researches commercial/multifamily delinquency rates for five of the largest investor-groups including CMBS, life insurance companies, commercial banks and thrifts as well as both government-sponsored enterprises, which hold more than 80% of commercial/multifamily mortgage debt outstanding, according to the association.
Additionally, an analysis of data from the Federal Deposit Insurance Corporation shows commercial and multifamily mortgages fared better through the credit crunch and recession more than any other major type of loan held by banks and thrifts, according to data released by the MBA.
"The amount of credit extended by banks stayed relatively constant during the recession, the delinquency rates for commercial and multifamily mortgages remained relatively subdued, and banks and thrifts saw far less in charge-offs for their commercial and multifamily mortgages than they did for other loan types," Woodwell said.
When looking at multifamily mortgages, the 2010 balance held by banks did not decline during the recession and the balance of commercial mortgages fell just 3% between the peak in 2009 and trough in 2011 before rising again in 2012, according to the MBA.
Given the various loans and leases held by banks and thrifts, commercial and multifamily mortgages finished 2012 with 30-plus day delinquency rates lower than the average for all loans as well as leases held by other institutions, according to the association.
Furthermore, throughout the credit crunch, recession and into 2012, commercial and multifamily mortgages had the lowest charge-off rates of any type of loan held by commercial banks and thrifts, MBA noted.