According to the Mortgage Bankers Association’s most recent CREF performance survey, default rates for commercial and secured multi-family mortgages have fallen over the last three months of 2021.

“In the fourth quarter, commercial and multifamily mortgage performance continued to improve, particularly among the property types hardest hit by the recession,” said Jamie Woodwell, MBA vice president of mortgage research. “The proportion of past due outstanding balances for residential property and retail has declined as owners, lenders, and managers continue to work in difficult markets. The percentage of new insolvent loan balances is the lowest since the pandemic began.

CREF MBA Credit Performance Survey Key Results for December 2021

The portfolio of long-term commercial and multi-family mortgages fell slightly in December 2021.

• 97.0% of outstanding loan balances were short-term compared to 96.7% at the end of Q3 2021.

• 1.9% were more than 90 days past due or in REO, versus 2.2% three months earlier.

• The 60- to 90-day delinquency rate was 0.2%, unchanged from the previous three months.

• 0.3% were 30-60 days past due, unchanged from three months ago.

• 0.7% were less than 30 days late compared to 0.8% three months earlier.

Lending secured by residential and commercial real estate continues to be the most stressful but also improved in the fourth quarter of 2021.

• Default of 10.5% of the home loan balance compared to 14.0% at the end of the third quarter of 2021.

• 7.6% of personal loan balances were in default, compared to 8.2% three months earlier.

• 2.1% of commercial mortgage loans are long-term, up from 1.8% three months earlier.

• 1.8% of the balance of real estate loans for office use are long-term, unchanged compared to the previous three months.

• 1.4% of multifamily sales were long-term, compared to 1.3% three months earlier.

Due to the concentration of hotel and retail loans, default rates on CMBS loans are higher than other sources of capital but have also improved over the last three months of 2021.

• 5.7% of CMBS loan balances were long-term compared to 7.2% in the third quarter of last year.

• Long-term interest rates for other sources of capital are more modest.

• 2.2% of FHA multifamily and healthcare loan balances were long-term, compared with 2.0% three months earlier.

• Long-term life insurance loan balances rose to 1.6% from 1.2% three months earlier.

• 0.6% of ESA loan balances are long-term, unchanged from the previous three months.

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