Delinquency rates on mortgage loans continue to decline

Strong property fundamentals, still-low interest rates likely to continue trend

Delinquency rates for commercial and multifamily mortgage loans continued to decline in the fourth quarter of 2015.

A commercial/multifamily delinquency report by the Mortgage Bankers Association (MBA) showed that the performance of commercial and multifamily mortgages remains strong, with continued improvement in the delinquency rates of loans held by banks and in commercial mortgage backed securities.

"Strong property fundamentals and values, coupled with still low interest rates, are likely to continue the positive trend," said Jamie Woodwell, MBA's vice president of Commercial Real Estate Research.

The MBA analysis looked at delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, Fannie Mae, and Freddie Mac. Together these groups hold more than 80% of commercial/multifamily mortgage debt outstanding.

Based on the unpaid principal balance of loans, delinquency rates for each group at the end of the fourth quarter were as follows:

Banks and thrifts (90 or more days delinquent or in non-accrual): 0.73%, a decrease of 0.09 percentage points from the third quarter of 2015;

Life company portfolios (60 or more days delinquent): 0.04%, unchanged from the third quarter of 2015;

Fannie Mae (60 or more days delinquent): 0.07%, an increase of 0.02percentage points from the third quarter of 2015;

Freddie Mac (60 or more days delinquent): 0.02%, an increase of 0.01percentage points from third quarter of 2015;

CMBS (30 or more days delinquent or in REO): 4.73%, a decrease of 0.11perecentage points from the third quarter of 2015.

The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.


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