The Mortgage Bankers Association (MBA) has released its latest commercial real estate finance Loan Performance Survey, which shows an increase in delinquency rates for mortgages backed by commercial properties during the fourth quarter of 2023. At the end of Q4, 96.8% of outstanding loan balances were either current or less than 30 days late, a decrease from 97.3% at the end of Q3.
According to Jamie Woodwell, MBA’s head of commercial real estate research and expert in this field: “Ongoing challenges within the commercial real estate market have led to higher delinquency rates for CRE-backed loans in the last three months.” The survey also revealed that office property-backed loans saw a jump to a delinquency rate of 6.5%, while lodging-backed loans increased to 6.1%.
While retail property-backed loan delinquencies remain elevated due to pandemic-related impacts, they remained unchanged during this quarter’s survey period. Delinquencies for multifamily and industrial property loans showed slight increases but still remain significantly lower.
Woodwell added that although long-term interest rates have decreased from their peak last year, many properties and loans are still facing higher rates as well as uncertainty about values and changes in fundamentals – particularly those with maturing loans this year.
In summary: Commercial mortgage delinquencies rose slightly during Q4-2023 due largely because ongoing challenges within CRE markets pushed up these numbers according MBA’s latest Loan Performance Survey results; however there is some relief on horizon thanks partly too lower long term interest rate environment we’re now experiencing – though it won’t be enough help all borrowers equally given each one faces different circumstances when dealing with maturing debt obligations over next twelve months.
