Mortgages backed by commercial properties saw delinquency rates rise in the fourth quarter, according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance (CREF) Loan Performance Survey.
“The delinquency rate for commercial mortgages increased during the final three months of 2024, with increases across most capital sources and property types,” Mike Fratantoni, MBA’s chief economist, said. “The challenges facing different sectors vary – with office properties perhaps facing the most challenging combination of weaker fundamentals and stubbornly high interest rates. However, despite the current conditions, other property types continue to benefit from a relatively strong economy.”
Specifically, the report found that the share of loans that were delinquent increased for some property types, particularly office, lodging, retail, and multifamily. For industrial properties, delinquencies decreased.
Further, 5.3 percent of CMBS loan balances were 30 days or more delinquent, up from 4.8 percent at the end of last quarter. In addition, 1.0 percent of FHA multifamily and health care loan balances were 30 days or more delinquent, up from 0.87 percent at the end of last quarter.
Additionally, 0.86 percent of life company loan balances were delinquent, down from 0.94 percent, while 0.6 percent of GSE loan balances were delinquent, up from 0.5 percent in the previous quarter.
MBA’s CREF Loan Performance survey collected information on commercial and multifamily mortgage portfolios as of December 30, 2024. Participants reported on $2.5 trillion of loans in December 2024, representing 52 percent of the total $4.7 trillion in commercial and multifamily mortgage debt outstanding.