Commercial and multifamily delinquency rates rose across for the segment's biggest investors,
But compared with past periods of turmoil, late payment rates remained relatively low.
Economists at both the MBA and Fannie Mae have forecasted that the U.S.
Meanwhile, the recent bank failures have only helped to
"Ongoing stress caused by higher interest rates, uncertainty around property values, and questions about fundamentals in some property markets are beginning to show up in commercial mortgage delinquency rates," said Jamie Woodwell, the MBA's head of commercial real estate research in a press release. "Delinquency rates increased for every major capital source during the first quarter, foreshadowing additional strains that are likely to work their way through the system."
The MBA report is an aggregation from various investor data sources, with each having its own definition and time frame for borrower late payments. Even among similar investor types there are differences, with Fannie Mae including loans in forbearance while Freddie Mac doesn't.
That explains the larger quarter-to-quarter increase for borrowers 60 days late or more at Fannie Mae, up 11 basis points to 0.35% as of March 31. For the same time frame, Freddie Mac had a 1 basis point rise to 0.13%.
In the first quarter of 2022, Fannie Mae had a 38 basis point delinquency rate, while Freddie Mac's was 8 basis points.
The 90-day-plus delinquency rate for banks and thrifts rose in the first quarter to 0.58%, a gain of 13 basis points from the fourth quarter's 0.45%. For the same period last year, it was 0.56%.
But even with this increase, bank and thrift commercial and multifamily delinquencies are well below the 4.21% rate recorded for the fourth quarter of 2010, during the Great Recession.
But the CMBS delinquency rate could rise as existing securities mature and the loans included are unable to refinance. Fitch Ratings, in a look at the $16.5 billion of transactions in its portfolio, determined that 35% of the loans would not be able to get new funding under any of its scenarios, up from the 23% it estimated last November.
In the fourth quarter of 2022 and the first quarter this year, 60 loans with a balance of $2.74 billion, 27% of the total Fitch-rated universe coming due during the time frame, did not refinance at maturity. Those defaulted loans were largely concentrated in regional malls and urban office properties, Fitch noted.
Life insurance companies, which invest premiums into long-term mortgages and real estate assets, had a 60-day-or-more delinquency rate of 0.21%, up 10 basis points from the fourth quarter, and up 16 basis points from the first quarter of 2022. Over 30 years ago, life insurance companies were