Delinquency Rates for Mortgages Backed by Commercial Property Decline Slightly in Q2

On Thursday, The Mortgage Bankers Association (MBA) released the results of its latest commercial real estate finance (CREF) Loan Performance Survey. The results indicated a marginal decrease in the delinquency rates for mortgages secured by commercial properties in Q2.

97.0% of outstanding loan balances were current or less than 30 days late at the end of the quarter, up from 96.8% in Q1.

The survey collected information on commercial and multifamily mortgage portfolios as of June 30th. This quarter’s results build on similar surveys conducted since April 2020.

In remarks accompanying the report, MBA Head of Commercial Real Estate Research Jamie Woodwell said:

“The delinquency rate for most property types declined last quarter, with the exception of loans backed by office properties, which experienced an increase. Even so, the pace of increase in the delinquency rate for office property loans appears to have slowed in recent quarters.

Commercial properties are working through changes in interest rates, property values, and the fundamentals of some properties. Each property and loan faces a unique mix of conditions depending on that property’s type and subtype, market and submarket, owner, vintage, deal terms and more. As more loans mature throughout the year, more properties will be adjusting to these new conditions.”