Bright Spot in Lending? Commercial Mortgages

WASHINGTON, DC - Unfriendly credit markets and other recessionary forces pushed up commercial mortgage delinquency rates in the third quarter, but the rates remained historically low, according to a report released today. "Commercial and multifamily mortgages have not seen the same kind of deterioration in performance witnessed among other real estate loans, and at the end of the third quarter, delinquency rates for every investor group remain at the lower end of their historic ranges," Jamie Woodwell, vice president of commercial real estate research for the Mortgage Bankers Association said in a statement.

Between the second and third quarters, the 30-plus day delinquency rate on loans held in commercial mortgage-backed securities rose 10 basis points, to 0.63 percent, according to the third-quarter Commercial and Multifamily Delinquency Report from MBA. Year-end CMBS delinquency rates over the past 10 years averaged 0.97percent.

The 60-plus day delinquency rate on loans held in life company portfolios increased three basis points, to 0.06 percent. That translates to 36 delinquent loans with a combined unpaid principal balance of less than $144 million, out of 35,135 commercial/multifamily loans in life insurance portfolios with $253 billion combined unpaid principal balance.

The 60-plus day delinquency rate on multifamily loans held or insured by Fannie Mae rose five basis points, to 0.16 percent, but the 60-plus day delinquency rate on multifamily loans held or insured by Freddie Mac fell two basis points, to 0.01 percent.

The 90-plus day delinquency rate on loans held by Federal Deposit Insurance Corp.-insured banks and thrifts rose 20 basis points, to 1.38 percent. That equates to $18 billion in delinquent loans of the total $1.2 trillion held of commercial/multifamily mortgages at FDIC-insured banks and thrifts. Combined, commercial banks and thrifts, commercial-backed securities, life insurance companies, Fannie Mae and Freddie Mac hold 80 percent of commercial and multifamily mortgage debt outstanding.