US mortgage delinquency rates for commercial properties jump

US mortgage delinquency rates for commercial properties jump

Washington: Mortgage delinquency on US commercial real estate jumped in the second quarter of the year as problems deepened in the nonresidential sector, a survey showed on Wednesday.

The delinquency rate on loans for 30 days or more held in commercial mortgage-backed securities rose 2.04 percentage points to 3.89% between the first and second quarters, said a report from the Mortgage Bankers Association (MBA).

Delinquency on loans for 60 days or more held in life insurance company portfolios rose 0.03 percentage points to 0.15% while that on multifamily loans held or insured by mortgage finance company Fannie Mae rose 0.17 percentage points to 0.51%.

The rate on multifamily loans for 90 days or more held or insured by Fannie Mae’s twin lender Freddie Mac rose 0.02 percentage points to 0.11% while that on loans held by US authorities-insured banks and thrifts rose 0.64 percentage points to 2.92%.

“The economic fallout of the recession continued to push commercial and multifamily delinquency rates higher during the second quarter," said Jamie Woodwell, MBA’s vice president of commercial real estate research.

“Lower levels of employment, the pullback by consumers and other aspects of the slowdown translated into a difficult operating environment for many income-producing properties," Woodwell said.

“That in turn has led to increased stress on the loans those properties support."

The commercial property sector took a hard knock after a home mortage meltdown triggered the biggest financial crisis in decades last year and plunged the world’s largest economy into recession.