“While loans of all real estate types are adapting to rising interest rates and uncertainty in property values, continued uncertainty about the impact of hybrid work is creating new challenges for office properties and loans,” Jamie Woodwell, MBA's head of commercial real estate research, explained in the report.
Delinquency rates varied across other property types, with residential mortgage delinquency balances at 6.3% (up from 6.1%), retail residential delinquency balances at 4.7% (down from 5.0%), multifamily delinquency balances at 1.2% (unchanged), and industrial real estate loan delinquency balances at 1.2% (up from 0.9%).
Pointing to the diversity of the commercial real estate market, Woodwell said, “With 20% of the $4.7 trillion in outstanding commercial mortgages maturing this year, each of these factors will play a key role in determining which loans will face distress and which will not.”
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Among capital sources, commercial mortgage-backed securities (CMBS) loans had the highest delinquency rates, with 5.2% of CMBS loan balances being 30 days or more past due, up from 5.1% in the prior quarter. Illiquid rates on other capital sources, including FHA multifamily loans, health care loans, life insurance company loans, and GSE loans, trended more moderately.