Dive Brief:
- The multifamily commercial mortgage-backed securities delinquency rate increased 37 basis points to 1.70% in May, with $245 million in newly delinquent multifamily loans, according to data provider Trepp. However, the firm noted that “a solid amount of loans” were resolved during the month.
- The servicing rate for multifamily CMBS loans rose 33 basis points to 5.43% in May. It was 2.40% in March 2024 before a large increase in April, when it passed 5% for the first time in seven years. In May 2023, it was 2.97%.
- Overall, May was a good month for commercial real estate delinquencies. The overall rate declined 10 bs to 4.97%, driven by more than $2 billion in office loans resolved during the month. However, the servicing rate across CRE rose 10 basis points to 8.21%, its highest rate since June 2021, according to Trepp.
Dive Insight:
While the Trepp reports focus on CMBS, delinquencies rose throughout commercial real estate across multiple capital sources, according to the Mortgage Bankers Association’s latest Commercial Delinquency Report.
“The increase was seen across most capital sources, pointing to the challenges caused by loans that are maturing amid higher interest rates, uncertain property values and questions about some properties’ fundamentals,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, in a press release.
MBA looks at commercial delinquency rates for five of the largest investor groups, which together hold 80% of debt outstanding. They include:
Deliquencies rise for lenders
| Capital source | Q1 rate | change vs. Q4 2023 |
| Banks and thrifts | 1.03% | 0.09 percentage points |
| Life companies | 0.52% | 0.16 percentage points |
| Fannie Mae | 0.44% | -0.02 percentage points |
| Freddie Mac | 0.34% | 0.06 percentage points |
| CMBS | 4.35% | 0.05 percentage points |
SOURCE: MBA
Construction and development loans are generally not included in the numbers. The MBA notes that each group tracks delinquencies in different ways, making them hard to compare.
Life insurance companies, Fannie Mae and Freddie Mac put loans in that category if they are 60 or more days delinquent. For banks and thrifts, loans 90 or more days delinquent or in non-accrual qualify. CMBS providers consider loans 30 or more days delinquent or in the real estate owned category.
“The rise in delinquency rates for commercial mortgages at banks was driven by banks designating non-multifamily loans — in particular, office — as ‘nonaccrual,’ meaning the loan may still be current on payments, but the lender does not expect to be paid in full,” Woodwell said.
Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.
