Delinquency Rates on Mortgages Backed by Office Properties Continue to Rise in Q1

On Thursday, the Mortgage Bankers Association reported that according to their latest commercial real estate finance (CREF) Loan Performance Survey, delinquency rates overall for mortgages backed by commercial properties were unchanged in Q1. However, loans backed by office properties continued to see a rise in delinquencies during the same period.

Elaborating on the results of the report, MBA Head of Commercial Real Estate Research Jamie Woodwell said:

“While overall delinquencies remained flat, the delinquency rate for loans backed by office properties rose again during the first three months of this year. Loans across property types are adjusting to higher interest rates and uncertainty about property values, but the continued fog around the impact of hybrid work adds another challenge for office properties and their loans.

The commercial real estate market is large and diverse, with a wide mix of property types, geographic markets and submarkets, property and loan sizes, owners, lenders, vintages, and other characteristics. With 20% of the $4.7 trillion of outstanding commercial mortgage debt maturing this year, each of those factors will play a part in determining which loans may face challenges and which may not.”