MBA: Commercial Loans Strong; Few Late-Pays

Woodwell points to low delinquency rates for life companies and the GSEs.

WASHINGTON, DC—The CMBS market is experiencing its share of volatility lately, a state of affairs that may be aggravated when new regulations take effect later this year. Nonetheless, taking the long view of the commercial lending market, including CMBS, leads to a brighter picture, as the Mortgage Bankers Association reported this week that delinquency rates were low across the board during the first quarter. And CBRE’s latest Lending Momentum Index is showing positive momentum compared to a year ago, although it declined by 6.3% in Q1 from the end of 2015.

“Strong fundamentals and strong property prices, as well as still-low interest rates, continue to support the performance of commercial and multifamily mortgages,” says Jamie Woodwell, MBA’s VP of commercial real estate research. ”A record decline in the volume of CMBS loans in foreclosure and REO brought a record decline in the delinquency rate for loans held in CMBS.  At the same time, delinquency rates remain extremely low for commercial and multifamily mortgages held by life insurance companies, Freddie Mac, Fannie Mae and banks and thrifts.”