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In 2023, total commercial real estate mortgage borrowing and lending was estimated at $429 billion, marking a 47 percent decline from $816 billion in 2022, and a 52 percent fall from the record high of $891 billion in 2021. These figures are highlighted in the Mortgage Bankers Association’s 2023 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation.

The MBA survey, which does not include data from smaller and mid-sized depositories, recorded $306 billion in loans closed by dedicated commercial mortgage bankers in 2023, a 49 percent decrease from $595 billion in 2022.

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, commented, “Higher interest rates, uncertainty about property values, and concerns over the fundamentals of some properties contributed to a sharp decline in CRE borrowing and lending last year. The reduction was widespread across all major property types and capital sources. The continued increase in the total CRE mortgage debt indicates that the drop in originations mainly reflected a lower borrower demand, influenced by fewer sales transactions and refinances. Where possible, property owners opted to hold steady.”

Woodwell also noted, “2024 seems to be starting slowly as well. High interest rates will likely remain a hindrance for many property owners, but with over $900 billion in loan maturities expected, and possibly a growing acceptance of these rates, we might see more activity in the market this year.”

Regarding specific property types, multifamily properties experienced the highest lending volume in the previous year, with an estimated total of $264 billion, and $178 billion of that directly tracked by dedicated mortgage bankers. First liens made up 96 percent of the dollar volume closed by mortgage bankers.

Mortgage banking firms reported closing $306 billion of CRE loans in their names and acting as intermediaries on another $225 billion. These firms also served as investment sales brokers for transactions worth $225 billion.

Depositories emerged as the top capital source for CRE mortgage debt, followed by life insurance companies, pension funds, government-sponsored enterprises (Ginnie Mae, Fannie Mae, and Freddie Mac), private label CMBS, and investor-driven lenders.


Source:  The World Property Journal


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Delinquency rates for mortgages backed by commercial and multifamily properties increased during the third quarter of 2023, according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance (CREF) Loan Performance Survey. The delinquency rate for loans backed by commercial properties has now increased for four consecutive quarters.

At. 5.1%, “the delinquency rate for loans backed by office properties now exceeds those of loans backed by retail and hotel properties, while the delinquency rates for multifamily and industrial property loans remain below 1%,” said Jamie Woodwell, MBA’s head of commercial real estate research. 

He continued, “Commercial property markets are working through challenges stemming from uncertainty about some properties’ fundamentals, a lack of transparency into where current property values are, and higher and volatile interest rates. The result has been a slow and steady uptick in delinquency rates, concentrated among loans facing more of those challenges.” 


Source:  Connect CRE

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Commercial and multifamily mortgage delinquency rates rose in the first quarter and in some cases the rate of increase in recent months has picked up steam, signaling growing problems for mortgage holders.

Loans held in commercial mortgage-backed securities had the highest delinquency rate, according to the Mortgage Bankers Association. Moreover, those rates have been rising steadily in the second quarter, according to bond rating agencies that track the data monthly.

However, it was banks and thrifts that saw the largest jump in the most seriously delinquent loans in the first quarter.

Bank and thrift loans 90 or more days delinquent or in non-accrual status jumped 0.13 percentage points from the fourth quarter of 2022. Those loans now make up 0.58% of outstanding commercial and multifamily loan balances, according to the MBA.

“Ongoing stress caused by higher interest rates, uncertainty around property values, and questions about fundamentals in some property markets are beginning to show up in commercial mortgage delinquency rates,” Jamie Woodwell, MBA’s head of commercial real estate research, said in a statement. “Delinquency rates increased for every major capital source during the first quarter, foreshadowing additional strains that are likely to work their way through the system.”

The banking industry continues to face significant downside risks and the Federal Deposit Insurance Corp. said they will be stepping up ongoing supervision of banks’ loan quality.

“Credit quality and profitability may weaken due to these risks and may result in a further tightening of loan underwriting, slower loan growth, higher provision expenses, and liquidity constraints,” FDIC Chairman Martin Gruenberg said in a statement about the industry’s first-quarter results. “Commercial real estate portfolios, particularly loans backed by office properties, face challenges should demand for office space remain weak and property values continue to soften.”

The Mortgage Bankers’ quarterly analysis looks at commercial and multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, and Fannie Mae and Freddie Mac. Together, these groups hold more than 80% of commercial and multifamily mortgage debt outstanding.

Based on the unpaid principal balance of loans, delinquency rates for the other four groups at the end of the first quarter of 2023 were as follows:

  • Life company portfolios (60 or more days delinquent): 0.21%, an increase of 0.10 percentage points from the fourth quarter;
  • Fannie Mae (60 or more days delinquent): 0.35%, an increase of 0.11 percentage points;
  • Freddie Mac (60 or more days delinquent): 0.13%, an increase of 0.01 percentage points;
  • CMBS (30 or more days delinquent or foreclosed upon): 3%, an increase of 0.10 percentage points.

The latest CMBS numbers show a quickening of deteriorating loan quality, according to S&P Global Ratings.

The U.S. CMBS overall delinquency rate rose 0.39 basis points month over month in May, the bond rating firm reported. This was the largest increase since June 2020 when the coronavirus pandemic had shut down many offices, hotels, and retail centers across the country for weeks.

By dollar amount, total delinquencies rose to $22.9 billion, a net increase of $2.8 billion month over month and $3.9 billion year over year. Seriously delinquent CMBS loans of 60 more days late in payments represented 89.7% of the total, according to S&P.

Delinquency rates for office loans increased 1.2 percentage points to 4%, according to S&P. That was the fifth consecutive month of increase and now stands at $7.2 billion.


Source:  CoStar