In the third quarter of 2023, commercial mortgage delinquencies continued to increase, according to the latest Commercial Delinquency Report from the Mortgage Bankers Association (MBA). This marks three consecutive quarters of rising delinquency rates.
According to Jamie Woodwell, head of commercial real estate research at MBA, all major capital sources experienced an uptick in delinquencies due to higher interest rates and changes in property market fundamentals. The uncertainty surrounding property values has also contributed to this trend. Additionally, sluggish CRE market activity has further complicated the situation.
Woodwell emphasizes that CRE markets are diverse and complex. Data from MBA’s own survey released earlier in the quarter revealed significant variations in mortgage performance by property type. Factors such as deal vintage, term length and location also play a role in determining which loans are facing pressure. These differences will likely continue to be important factors throughout next year.
Based on unpaid principal balance (UPB), here is a breakdown of Q3 delinquency rates for each group:
– Banks and thrifts: 0.85% (an increase of 0.18 percentage points from Q2)
– Life company portfolios: 0 .32% (an increase o f 0 .18 percentage points)
– Fannie Mae : 0 .54% (an increase o f
