WASHINGTON, DC-Two separate reports add to the growing picture of health that is commercial real estate finance. Both reports--one from the Mortgage Bankers Association, the other from Chandan Economics—show delinquency rates dropping across most categories of loan types. "Improvements in underlying property performance and property values, and the continued availability of commercial and multifamily mortgage financing, led to declines in delinquency rates for every major investor group," said Jaime Woodwell, MBA's Vice President of Commercial Real Estate Research.
MBA reported that delinquency rates for commercial and multifamily mortgage loans continued their decline in the third quarter of 2013, with the 60+ day delinquency rate for commercial and multifamily mortgages held in life company portfolios decreasing 0.02 percentage points to 0.06%.
The 60+ day delinquency rate for multifamily loans held or insured by Freddie Mac decreased 0.04 percentage points to 0.05%. The 60+ day delinquency rate for multifamily loans held or insured by Fannie Mae decreased 0.10 percentage points to 0.18%. The 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.23 percentage points to 1.95%.
The 30+ day delinquency rate for loans held in CMBS decreased 0.30 percentage points to 7.51%.
Separately, Chandan Economics found a similar decline when it analyzed bank call reports for the quarter—along with an increase in banks' net commercial real estate and construction lending activities.
The default rate on banks' combined multifamily and commercial real estate balances declined to 1.94%, down 24 basis points from the previous quarter and more than 100 basis points from a year earlier. The multifamily default rate fell to 0.96%, down from a mid-2010 peak of 4.71%, to its lowest level since Q4 2007. The commercial property default rate fell to 2.18%, less than half its mid-2010 peak of 4.35%. The construction loan default rate fell to half it year-earlier level, down more than 100 basis points during the quarter to 4.89%.
Chandan also found that banks' multifamily and commercial real estate REO balances declined to $8.5 billion in the quarter, down from $9.1 billion during the prior quarter. Construction REO declined to $9.3 billion.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
