Commercial Real Estate News
U.S. Commercial Mortgage Debt Hits $4.7 Trillion in Q2 as Delinquencies Increase
According to the latest Commercial Delinquency Report from the Mortgage Bankers Association (MBA), U.S. commercial mortgage delinquencies rose in the second quarter of 2024.
The MBA's quarterly analysis examines delinquency rates for five major investor groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac. Collectively, these groups account for over 80 percent of outstanding commercial mortgage debt. The MBA's report reflects how each investor group tracks its loan performance, as each uses its own method to measure delinquencies. For example, Fannie Mae counts loans under payment forbearance as delinquent, while Freddie Mac excludes such loans if borrowers comply with forbearance terms.
At the close of Q2 2024, delinquency rates based on unpaid principal balance (UPB) were as follows:
- Banks and thrifts (90+ days delinquent or in non-accrual): 1.15%, up by 0.12 percentage points from Q1 2024;
- Life insurance portfolios (60+ days delinquent): 0.43%, down by 0.09 percentage points from Q1 2024;
- Fannie Mae (60+ days delinquent): 0.44%, unchanged from Q1 2024;
- Freddie Mac (60+ days delinquent): 0.38%, up by 0.04 percentage points from Q1 2024; and
- CMBS (30+ days delinquent or in REO): 4.82%, an increase of 0.47 percentage points from Q1 2024.
"The delinquency rate for loans backed by commercial real estate increased again in the second quarter," said Jamie Woodwell, MBA's Head of Commercial Real Estate Research. "Delinquency rates increased for bank loans and Freddie Mac loans, as well as those held in CMBS. Delinquency rates decreased for loans held by life companies and were unchanged for Fannie Mae."
Woodwell continued, "The greatest focus continues to be on office loans, which make up about $740 billion of the $4.7 trillion of commercial mortgage debt outstanding. The CRE market is large and diverse, with significant differences by property type and subtype, market and submarket, borrower, lender, vintage, and more. All of those differences come into play in terms of how an individual loan may perform."
