Go Figure. Just when you thought all the news was gloom and doom, delinquency rates on commercial and multifamily loans ended 2007 at or near record lows for most major investor groups, according to new research by the Mortgage Bankers Association (MBA).

Fourth quarter delinquency rates for commercial mortgage-backed securities (CMBS), life companies, and government-sponsored enterprises Fannie Mae and Freddie Mac clocked in at or near historic lows. And for FDIC-insured commercial banks and thrifts, delinquency rates were lower at year-end 2007 than during five of the previous 11 years and 10 of the past 16 years. By the end of 2007, delinquency rates for CMBS were lower than for nine of the last 10 years. Life companies finished 2007 with the lowest delinquency rate in the past 11 years. Fannie Mae finished the year with a rate equal to or lower than 10 of the previous 11 years, and Freddie Mac finished with a rate lower than 10 of the past 11 years.

Based on the unpaid principal balance of loans, here is how delinquency rates for each investor group looked at the end of 2007:

• CMBS: 0.40% (30+ days delinquent or in REO);

• Life company portfolios: 0.01% (60+days delinquent);

• Fannie Mae: 0.08% (60 or more days delinquent);

• Freddie Mac: 0.02% (60 or more days delinquent)

• Banks and thrifts: 0.80% (90 or more days delinquent or in non-accrual).

Banking on these low numbers, lenders continued to pump debt capital into the industry through the end of last year.   Overall commercial/multifamily mortgage debt outstanding grew by 2.6% in the fourth quarter, exceeding $3.3 trillion, according to recent flow of funds data from the Federal Reserve Board. That was an increase of $356 billion, or 12%, from the end of 2006. Multifamily mortgage debt alone increased by $28.2 billion during the fourth quarter, the largest increase on record.

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Posted in CMBX, Delinquency Rates, Developers, Bankers, Market Trending, Historical Perspective, Commercial Real Estate | 2 Comments