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Multifamily, commercial mortgage delinquency rates near 20-year lows

MBA report shows delinquencies declining across the board

A recent report from MGIC Investment Corporation, a provider of primary insurance covering approximately one million mortgages, showed a decrease of over 20% in residential mortgage delinquent inventory.

As it turns out, delinquencies are dropping for more than just residential mortgages.

According to a new report from the Mortgage Bankers Association, multifamily and commercial mortgage delinquency rates are nearing 20-year lows as well.

The data comes courtesy of the MBA's Commercial/Multifamily Delinquency Report, which looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, Fannie Mae, and Freddie Mac.

According to the MBA, these groups groups hold more than 80% of the outstanding commercial/multifamily mortgage debt.

Commercial and multifamily delinquency rates are measured differently by each investor group, making it difficult to compare one investor group to another. While they can’t be compared to each other, delinquency rates in each group can be compared to their own historical averages.

And the latest data shows that delinquencies are falling, as shown in the chart below.

Click to Enlarge


(Source: MBA, Wells Fargo Securities, Intex Solutions, American Council of Life Insurers, Fannie Mae, Freddie Mac, OFHEO and Federal Deposit Insurance Corporation)

"For most capital sources, commercial and multifamily mortgage delinquency rates are near the lowest levels seen during the past 20 years," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "Strong property fundamentals, rising property values and solid mortgage availability are all supporting these rates."

According to the MBA, it should be noted that construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of “commercial real estate” despite the fact they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers, or other income-producing properties.

Contrary to the other groups, delinquency rates in the commercial mortgage-backed security market include loans in foreclosure and real estate owned. CMBS delinquency rates also include loans that are 30 days or more past-due.

The government-sponsored enterprises and life insurance companies track loans that are 60 days or more past due. Bank loans track delinquencies starting at 90 days or more past due.

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