Commercial Mortgage Delinquency Rates Fall


Chandan Economics and the Mortgage Bankers Association released data last week that points to continued improvements in the commercial real estate market.

Chandan released its Q2 2012 Bank CRE Default and Lending Report, which analyzed second quarter call report data. This data showed that the default rate on commercial mortgages held by banks  had fallen to its lowest level since the middle of 2009—to 3.11 percent. This marked a 34 basis point drop when compared to the previous quarter.

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woodwelljlg Commercial Mortgage Delinquency Rates Fall
Jamie Woodwell.

The multifamily default rate improved as well, falling to 2.03 percent. At the same time, lending picked up for this sector. Net lending on behalf of banks to commercial property and multifamily borrowers increased by nearly $5 billion for the quarter.

The findings dovetail with recent findings from the Mortgage Bankers Association, which last week released its Commercial/Multifamily Delinquency Report.

The MBA said that delinquency rates for commercial and multifamily mortgages held by banks had continued to drop for Q2 2012, falling to the 3.11 percent figure that the Chandan Economics research found.

For life companies, there was a 0.01 percent uptick for these delinquencies—they rose to 0.15 percent for the quarter. However, CMBS delinquencies continued to rise, showing the largest increase. CMBS delinquencies rose to 8.97 percent for the quarter.

“Commercial and multifamily delinquency rates for life companies, Fannie Mae and Freddie Mac all remain quite low, and the delinquency rate for bank-held loans continues to decline,” Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research, said in a prepared statement about the findings. “The delinquency rate for loans in CMBS continues to show higher and more sustained aggregate delinquency rates, much of which is driven by the large share of these loans in foreclosure or REO.”

The MBA’s full report on delinquency rates for major groups of investors is viewable here.