Commercial loan delinquencies fall near record lows

The Scotsman Guide - Victor Whitman - 09 March 2017

Commercial loan delinquencies continue to hover at historic loans despite an uptick in delinquent legacy loans packaged in commercial mortgage-backed securities (CMBS), the Mortgage Bankers Association reported.

The delinquency rate of loans held by three of the four major investor types —  banks, life insurance companies and the government-sponsored enterprises Fannie Mae and Freddie Mac — all ended 2016 below 1 percent and lower than the level a year earlier.

Loans held by Fannie Mae and Freddie Mac had delinquency rates at 0.05 percent and 0.03 percent, respectively. Loans held by banks and life insurance companies had a delinquency rate of 0.59 percent and 0.04 percent, respectively.

CMBS loan delinquencies ticked up by 30 basis points over the 2015 year-end level to 4.53 percent. Most analysts expect CMBS delinquencies to rise this year as the final wave of loosely underwritten and overleveraged loans from the last asset bubble mature.   

"For most investor groups, commercial and multifamily mortgage delinquencies are at or near their all-time lows," said MBA Vice President of Commercial Real Estate Research Jamie Woodwell.