While the overall delinquency rate remained stable, there were significant differences in property types. Loans backed by office properties drove the increase, up to 4% from just 2.7% quarter over quarter. Retail mortgages followed with a three-basis-point rise to 4.9%. Meanwhile, the balance of delinquent lodging and industrial loans fell three basis points to 5.3% and one basis point to 0.8%, respectively. The multifamily loan delinquency rate in Q2 was unmoved at 0.7%.
“Delinquency rates remain highest for lodging and retail loans, which have improved markedly but remain elevated as a result of pandemic-related impacts,” Jamie Woodwell, MBA’s head of commercial real estate research, explained in the report. “Not unexpectedly, delinquencies among mortgages backed by office loans drove the overall increase this quarter – with the office delinquency rate rising 130 basis points from 2.7% to 4%. By comparison, retail delinquency rates rose 30 basis points, multifamily loan delinquency rates were unchanged, and industrial and lodging delinquency rates declined.”
Among capital sources, CMBS loan delinquencies registered the largest increase of eight basis points to 4.1%. On the other hand, non-current rates for other capital sources remained more moderate, with delinquencies for FHA multifamily and healthcare loans at 0.8%, life company loans at 0.4%, and GSE loan balances at 0.3%.
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“Recent volatility in interest rates, uncertainty around property values, and questions about some property fundamentals have led to a logjam in parts of the sales and mortgage transaction markets,” Woodwell said. “As loans mature, owners, lenders, and others will be working to identify the best path forward for each asset – which may help begin to break that logjam.”
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