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MBA: Commercial Mortgage Debt Increases, Delinquencies Remain Low

At the end of the second quarter, commercial and multifamily mortgage debt outstanding reached a total of $3.06 trillion, according to the Mortgage Bankers Association’s (MBA) most recent Commercial/Multifamily Mortgage Debt Outstanding report.

The total level of commercial and multifamily mortgage debt outstanding rose $48.7 billion or 1.6% from the first quarter of 2017. Multifamily mortgage debt outstanding rose to $1.2 trillion in the second quarter, increasing $21.7 billion or 1.7% from the first quarter.

Commercial banks held $1.2 trillion of the debt outstanding, or 41% of the total. Commercial mortgage-backed securities held the smallest percentage of the total commercial and multifamily mortgage debt outstanding with $428 billion, or 14%.

“The amount of commercial and multifamily mortgage debt outstanding ticked up during the second quarter,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “At the same time, the balance of loans in CMBS continued its decline, with more loans being paid off and down than new loans being originated. This may be one of the last quarters of this long term trend, as the 10-year loans that were made in 2006 and 2007 have now almost all matured, and there are relatively few CMBS maturities during the remainder of 2017 and 2018.”

Additionally, delinquency rates for commercial and multifamily mortgages remained low during the second quarter, according to the MBA.

“Loans backed by commercial and multifamily properties continue to perform extremely well,” said Woodwell. “For most lender types – including banks, life insurance companies, Fannie Mae and Freddie Mac– delinquency rates are at or near their all-time lows.”

Woodwell continued, “The commercial mortgage-backed securities (CMBS) market is the one outlier. The slower decline in the balance of loans that are delinquent than in the total of all loans has pushed the delinquency rate higher. We expect that situation to reverse in coming quarters.”

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