Commercial mortgage-backed securities lenders were the only investor type to show a decline in delinquencies between the second and third quarters, according to a Mortgage Bankers Association report.
While coming off of a record high of 9.6% in the second quarter moving down 170 basis points to 7.9% for the third quarter, they are still elevated compared to the first quarter's 1.79% and
Investor delinquency rates are pegged to the types of properties to which they're lending. For example, CMBS delinquency rates are driven by
"Much of the stress in the market is driven by loans, predominantly for lodging and retail properties, that became delinquent in April and May and have now transitioned to later-stage delinquencies," Jamie Woodwell, the MBA's vice president of commercial real estate research, said in a press release. "November did see small increases in newly delinquent retail, lodging and office loans, but at levels far below what was seen at the
Concurrent with the release of its quarterly commercial and multifamily delinquency report, the MBA provided data from its November Commercial Real Estate Finance Loan Performance Survey.
By unpaid principal balance, 22.1% of hotel loans and 12.9% of retail loans were noncurrent on their payments in November, up from 21% and 12%, respectively, in October.
Across the whole commercial and multifamily spectrum, there was an increase in the less-than-30-days-late grouping to 1% for November from 0.7% in October, and the 30-to-60-day category to 0.7% from 0.6%. However, there was a decline in the 60-to-90-day delinquency rate to 0.4% from 0.6%, while the 90-day-plus and real estate owned segment's delinquency rate was unchanged at 3.5%.
For its quarterly report, the MBA aggregates the delinquency rates from various sources and uses the source definitions, so comparisons across investor types are not possible, except as a measurement of trends. The CMBS rate, for example, measures loans late by 30 days or more and unlike other types, also includes foreclosed loans and real estate owned.
The 60-day-plus delinquency rate for mortgage investments by life insurers rose to 17 bps in the third quarter, from 15 bps in the second quarter and 4 bps in the first quarter.
Fannie Mae's third-quarter 60-day-plus delinquency rate was up 12 bps from the second quarter to 1.12%; in the first quarter it was 0.05%. For Freddie Mac, the rate rose to 0.13% in the third quarter from 0.1% in the second quarter and 0.08% in the first quarter. However, Fannie Mae reports loans that are receiving forbearance as delinquent, while Freddie Mac excludes those.
For banks and thrifts, the 90-day-plus delinquency rate was 72 bps in the third quarter, compared with 64 bps in the second quarter and 51 bps in the first quarter.
Controlling the pandemic's spread will have the biggest impact on commercial and multifamily delinquency rates next year, Woodwell said.
"Looking to 2021, widespread vaccinations should help the economy and commercial real estate — especially the hard-hit retail and leisure and hospitality sectors — start to recover at a faster pace by mid-summer," Woodwell said. "Between now and then, much will depend on how long the current surge lasts, and the degree to which it holds back economic activity."
