Delinquency rates for mortgages backed by commercial properties increased during the fourth quarter of 2023, according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance Loan Performance Survey. 96.8% of outstanding loan balances were current or less than 30 days late at the end of Q4, down from 97.3% at the end of Q3.

“Ongoing challenges in commercial real estate markets pushed the delinquency rate on CRE-backed loans higher in the final three months of 2023,” said Jamie Woodwell, MBA’s head of commercial real estate research. “Delinquency rates jumped to 6.5% of balances for loans backed by office properties and to 6.1% for lodging-backed loans.

“Delinquencies for loans backed by retail properties remain elevated from the onset of the pandemic but were unchanged during the quarter. Delinquency rates for multifamily and industrial property loans both increased marginally but remain much lower.”

He continued, “Long-term interest rates have come down from their highs of last year, which should provide some relief to some loans, but many properties and loans still face higher rates, uncertainty about property values and – for some properties – changes in fundamentals. Each loan and property faces a different set of circumstances, which will come into play as the market works through loans that mature this year.” 

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