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MBA: Commercial, multifamily mortgages continue performing historically well

Delinquencies remain near historic lows

It was basically the same song, different verse for commercial and multifamily mortgages at the end of 2018, with those mortgages continuing to perform at historic levels throughout the fourth quarter.

According to newly released data from the Mortgage Bankers Association, delinquency rates on commercial and multifamily mortgages remained near historic lows during the fourth quarter, just as they did all year.

And without drastic changes to the economy in the future, things will probably remain the same, Jamie Woodwell, MBA's vice president of research and economics, said.

“It’s hard to imagine commercial and multifamily mortgages performing much better than they have recently,” Woodwell said. “Future performance will be largely driven by changes in the economy and how they affect property incomes, property values and the ability of owners to refinance when their loans come due. Currently, all of those factors are favorable.”

According to the MBA report, delinquency rates among the five largest investor-groups basically remained unchanged from the third quarter totals, which were also extremely low.

Those five groups, commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, Fannie Mae, and Freddie Mac, hold more than 80% of the commercial/multifamily mortgage debt outstanding.

Broken down by loan type, based on unpaid principal balance of loans, delinquency rates for each group at the end of the third quarter were:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.48%, unchanged from the third quarter of 2018
  • Life company portfolios (60 or more days delinquent): 0.05%, an increase of 0.01 percentage points from the third quarter of 2018
  • Fannie Mae (60 or more days delinquent): 0.06%, a decrease of 0.01 percentage points from the third quarter of 2018
  • Freddie Mac (60 or more days delinquent): 0.01%, unchanged from the third quarter of 2018
  • CMBS (30 or more days delinquent or in REO): 2.77%, a decrease of 0.28 percentage points from the third quarter of 2018

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