The Mortgage Bankers Association (MBA) has reported an increase in delinquency rates for commercial property mortgages during the fourth quarter of 2023. According to MBA’s latest Loan Performance Survey, only 96.8% of outstanding loan balances were current or less than 30 days late at the end of Q4, down from 97.3% in Q3.
Head of commercial real estate research at MBA, Jamie Woodwell stated that ongoing challenges in the market have contributed to this rise in delinquency rates. The office and lodging sectors saw a significant jump with delinquencies reaching up to 6.5% and 6.1%, respectively.
Retail properties continue to face elevated levels of delinquencies since the start of the pandemic but remained unchanged during this quarter. On a positive note, multifamily and industrial property loans experienced marginal increases but still remain relatively low.
Woodwell also mentioned that although long-term interest rates have decreased from last year’s highs, many properties and loans are still facing higher rates along with uncertainty about their values due to changes in fundamentals caused by COVID-19 impacts on businesses across various industries.
As we move forward into this year where many loans will mature soon, each property faces unique circumstances which will play a crucial role as we navigate through these challenging times for commercial real estate markets.
