Woodwell noted that delinquency rates rose for bank loans, Freddie Mac loans, and commercial mortgage-backed securities (CMBS), while loans held by life insurance companies saw fewer delinquencies.
Here’s how each group performed in terms of delinquency rates at the end of the second quarter of 2024, based on the unpaid principal balance (UPB) of loans:
- Banks and thrifts: The delinquency rate for loans 90 or more days delinquent, or in non-accrual, increased to 1.15%, up by 0.12 percentage points from the first quarter.
- CMBS: Loans 30 or more days delinquent, or in real estate-owned (REO) status, rose significantly to 4.82%, an increase of 0.47 percentage points from the previous quarter.
- Life insurance companies: The delinquency rate for loans 60 or more days delinquent decreased to 0.43%, down by 0.09 percentage points.
- Fannie Mae: Delinquencies for loans 60 or more days overdue remained steady at 0.44%.
- Freddie Mac: The delinquency rate for loans 60 or more days delinquent increased slightly to 0.38%, up by 0.04 percentage points.
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“The greatest focus continues to be on office loans,” Woodwell added. “The CRE market is large and diverse, with significant differences by property type and subtype, market and submarket, borrower, lender, vintage, and more. All of those differences come into play in terms of how an individual loan may perform.”
Office loans accounted for approximately $740 billion of the $4.7 trillion in commercial mortgage debt currently outstanding. Office loans have been a major point of concern in the commercial real estate market, which remains under pressure as companies reduce office space in the wake of shifting work conditions.
