Commercial Mortgage Delinquency Rates Increased in the First Quarter of 2024

Commercial mortgage delinquency rates continued to increase during the first three months of 2024. Increases were seen across most capital sources, pointing to the challenges caused by loans that are maturing amid higher interest rates, uncertain property values, and questions about some properties’ fundamentals.

It is important to recognize that different capital sources track delinquencies in different ways – and with good reason. The rise in delinquency rates for commercial mortgages at banks was driven by banks designating non-multifamily loans – in particular, office – as ‘nonaccrual,’ meaning the loan may still be current on payments, but the lender does not expect to be paid in full. The increases in such loans, and the associated net-charge-offs at large banks, can be seen as evidence of the institutions working to get ahead of potential future defaults. 

Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the first quarter of 2024 were as follows:

• Banks and thrifts (90 or more days delinquent or in non-accrual): 1.03 percent, an increase of 0.09 percentage points from the fourth quarter of 2023;
• Life company portfolios (60 or more days delinquent): 0.52 percent, an increase of 0.16 percentage points from the fourth quarter of 2023;
• Fannie Mae (60 or more days delinquent): 0.44 percent, a decrease of 0.02 percentage points from the fourth quarter of 2023;
• Freddie Mac (60 or more days delinquent): 0.34 percent, an increase of 0.06 percentage points from the fourth quarter of 2023; and
• CMBS (30 or more days delinquent or in REO): 4.35 percent, an increase of 0.05 percentage points from the fourth quarter of 2023.

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