In the first quarter of 2024, commercial mortgage delinquencies saw an increase, according to the latest Commercial Delinquency Report from the Mortgage Bankers Association (MBA). This rise was observed across all property types except for Fannie Mae.
Different lender groups have varying methods for measuring delinquencies, as noted by MBA. The Q1 delinquency rates were as follows:
– Banks and thrifts (90 or more days past due or in non-accrual): 1.03%, up by 0.09 percentage points from Q4 of 2023
– Life company portfolios (60 or more days past due): 0.52%, up by 0.16 percentage points from Q4 of
2023
– Fannie Mae (60 or more days past due): down by -0.02 percentage points at a rate of only .44% compared to last quarter.
Freddie Mac: Up .06 percent at a rate now standing at .34%
CMBS: A whopping increase in this category with a jump upwards towards almost half-a-percent higher than it was just three months ago.
“Commercial mortgage delinquency rates continued their upward trend during the first quarter,” stated Jamie Woodwell, head researcher on commercial real estate projects for MBA.”This is evident across most capital sources and highlights challenges faced when loans mature amidst rising interest rates and uncertain property values.”
Woodwell went on to say that “it’s important to note that different capital sources track these numbers differently – each with good reason.” He pointed out how banks are designating certain non-multifamily loans – specifically office properties – as “nonaccrual,” meaning they may still be current on payments but lenders do not anticipate being paid back in full.
The increases seen among these types of loans can be viewed as evidence that institutions are proactively addressing potential defaults before they occur through net charge-offs at larger banks.
