May Multifamily Mortgage Delinquency Rates at a Glance

Take a quick peek at the mortgage delinquency rates for our industry, and how they have moved since Q4 2020.

The month of May, as far as the multifamily industry is concerned, has been an interesting period of time. One metric that has shown some relatively important movement in the previous month has been that of mortgage delinquency rates. While almost all important industry metrics have been in some way, shape, or form impacted heavily by the strain of the pandemic, the insight on mortgage delinquency rates actually brings some important considerations to the table.

According to data from a recent survey conducted by the Mortgage Bankers Association, it appears as though commercial and multifamily mortgage delinquency rates have hit a new low since the beginning of the pandemic. Jamie Woodwell, Vice President of Commercial Real Estate Research at the Mortgage Bankers Association, went on to state “Pockets of elevated stress remain in loans backed by lodging and retail properties, driven by loans in the later stages of delinquency and foreclosure or REO. Quarterly measures of delinquency rates between last year’s fourth quarter and this year’s first quarter show a drop in distress across nearly every capital source.” Naturally, while the data only shows small incremental change, the direction of the recent movement is what matters most. With more outstanding loan balances remaining current, it could be the rallying point for a strong return to commercial and multifamily lending in general. 

Before getting too invested, the data shows a much more sobering view on the matter. In terms of total outstanding loan balances, 95.2% were current in the month of May, up only slightly from the 95.1% figure reported in April. Additionally, a similar minor movement was to be seen in commercial and multifamily mortgage 90+ delinquencies and REO, wherein the rate dropped from 3.2% in April to 3.1% in May. It is also important to note that while delinquencies in lodging and office property-based loans fell, retail property loans are still the most affected by the pandemic, and their delinquency rate actually increased from April’s figure and is now sitting at 9.5%. 

The delinquency rate breakdown by investor group is as follows:

  • Fannie Mae (60+ days delinquent): 0.66%, A drop of .32% from Q4 2020

  • Freddie Mac (60+ days delinquent): 0.17%, 0.01% higher than Q4 2020

  • CMBS (30+ Days Delinquent or in REO): 6.3%, 1.2% lower than Q4 2020

  • Banks & Thrifts (90+ Days delinquent or in non-accrual): 0.8%, 0.03% lower than Q4 2020

  • Life Companies (60+ days delinquent): 0.10%, 0.6% lower than Q4 2020

Hopefully, this trend is a sign of things to come, and we will begin to see the delinquency rates hit pre-pandemic levels again as vaccinations become more and more available, and the country begins its shift back to the old normal. The multifamily finance industry has remained relatively strong throughout this pandemic, and the hard work that has gone into preserving the industry through these unprecedented times is finally starting to pay off. It's only a matter of time now before these reports start showing the figures we’ve all been waiting for since March of 2020.