Record Decline in Commercial Mortgage-Backed-Securities Delinquency

Delinquency rates for commercial and multifamily mortgages loans improved in the second quarter of 2013 across all of the major groups that invest in them.  The Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report released on Wednesday  showed a particularly strong decline in the mortgage rate for loans held in commercial mortgage-backed securities (CMBS), calling it the largest on record.

The 30+ day delinquency rate for CMBS portfolios dropped by 74 basis points during the quarter, from 8.55 percent to 7.81 percent.  The rate had hit its post-crash peak in the second quarter of 2011 at 9.02 percent and was at 8.97 percent at the end of the second quarter of 2012.

The 90+ day delinquency rate for loans held by banks and thrifts declined from 2.42 percent at the end of the first quarter to 2.16 percent in the second.   The rate at the end of the same quarter a year earlier was 3.12 percent.

Loans held in life insurance company portfolios had remained low throughout the recession and post-recession period, topping out at a 60+ day rate under .3 percent.  At the end of the second quarter the rate was at 0.08 percent, down one basis point from the first quarter.

Multifamily loans held by Fannie Mae had reached a peak 60+ day delinquency rate of .80 percent in the second quarter of 2010 percent and Freddie Mac's 60+ day rate peaked at 0.36 percent in the first quarter of 2011. In the most recent quarter the rate for Fannie Mae's loans was .28 percent, 11 basis points below that of the first quarter.  The rate for Freddie Mac's multifamily portfolio was down .07 point to 0.9 percent. 

Commercial and multifamily loan performance continued to improve during the second quarter, with delinquency rates falling for every major investor group," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "The quarterly decline in the delinquency rate of loans held in commercial mortgage-backed securities (CMBS) was the largest on record, and delinquency rates for loans held by life companies and the GSEs remain low and fell lower during the quarter."

The five large investor groups included in MBA's delinquency analysis together hold more than 80 percent of outstanding commercial/multifamily mortgage debt.