Commercial, Multifamily Mortgage Delinquencies at Lowest Levels Since Start of Pandemic

Real Estate In-Depth | April 2, 2021

WASHINGTON—Delinquency rates for mortgages backed by commercial and multifamily properties decreased again in March, reaching the lowest level since the onset of the COVID-19 pandemic, according to the Mortgage Bankers Association’s latest monthly CREF Loan Performance Survey.

“Commercial and multifamily mortgage delinquencies fell for the third straight month in March and are now at their lowest level since the pandemic disrupted the economy and commercial real estate a year ago,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “There continues to be significant differences in loan performance by property type, with higher delinquencies rates for lodging- and retail-backed mortgages.”

Key findings from MBA’s CREF Loan Performance Survey for March 2021 included:

• The balance of commercial and multifamily mortgages that are not current decreased again in March to its lowest level since April 2020.

• 95.0% of outstanding loan balances were current, up from 94.8% in February.

• 3.2% were 90+ days delinquent or in REO, down from 3.5% a month earlier.

• 0.3% were 60-90 days delinquent, unchanged from a month earlier.

• 0.5% were 30-60 days delinquent, down from 0.6% a month earlier.

• 0.9% were less than 30 days delinquent, up from 0.8%.

Loans backed by lodging and retail properties continue to see the greatest stress. The overall share of industrial, retail, health and other loan balances that are delinquent decreased in March.

• 20.5% of the balance of lodging loans were not current, down from 20.6% a month earlier.

• 9.5% of the balance of retail loan balances were delinquent, down from 10.8% a month earlier.

• Non-current rates for other property types were lower during the month.

• 1.2% of the balances of industrial property loans were non-current, down from 2.7% a month earlier.

• 2.4% of the balances of office property loans were non-current, flat from a month earlier.

• 1.8% of multifamily balances were non-current, up from 1.7% a month earlier.

Because of the concentration of hotel and retail loans, CMBS loan delinquency rates are higher than other capital sources. All major capital sources saw a lower share of loan balances non-current than from a month earlier.

• 8.7% of CMBS loan balances were non-current, down from 9.3% a month earlier.

• Non-current rates for other capital sources were more moderate.

• 2.1% of FHA multifamily and health care loan balances were non-current, down from 2.7% a month earlier.

• 1.6% of life company loan balances were non-current, down from 2.0%.

• 1.2% of GSE loan balances were non-current, down from 1.3% a month earlier.

MBA’s CREF Loan Performance survey collected information on commercial and multifamily mortgage portfolios as of March 20, 2021. This month’s results build on similar monthly surveys conducted since April 2020, the MBA stated. Participants reported on $1.9 trillion of loans in March, representing approximately half of the total $3.8 trillion in commercial and multifamily mortgage debt outstanding (MDO).