EOY 2015 Apartment Cap Rate Trends

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Multifamily Mortgage Delinquency Declines Reflect Economic Gains

Delinquency rates for commercial and multifamily mortgage loans continued to decline in the third quarter of 2013, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.

During the third quarter of 2013, the 60+ day delinquency rate for commercial and multifamily mortgages held in life company portfolios decreased 0.02 percentage points to 0.06%. The 60+ day delinquency rate for multifamily loans held or insured by Freddie Mac decreased 0.04 percentage points to 0.05%. The 60+ day delinquency rate for multifamily loans held or insured by Fannie Mae decreased 0.10 percentage points to 0.18%. The 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.23 percentage points to 1.95%.

The 30+ day delinquency rate for loans held in commercial mortgage-backed securities (CMBS) decreased 0.3 percentage points to 7.51%.

“Commercial and multifamily mortgage performance continues to reflect overall economic gains,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Improvements in underlying property performance and property values, and the continued availability of commercial and multifamily mortgage financing, led to declines in delinquency rates for every major investor group.”

The third quarter 2013 delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.47 percentage points lower than the series high (7.53%, reached during the second quarter of 1992). The delinquency rate for multifamily loans held by Freddie Mac was 6.76 percentage points lower than the series high (6.81%, reached in the fourth quarter of 1992).

The delinquency rate for multifamily loans held by Fannie Mae was 3.44 percentage points below the series high (3.62%, reached during the fourth quarter of 1991).

The rate for commercial and multifamily mortgages held by banks and thrifts was 4.63 percentage points lower than the series high (6.58%, reached in the second quarter of 1991). The rate for loans held in CMBS was 1.51 percentage points below the series high (9.02%, reached in the second quarter of 2011).

Source: Mark Heschmeyer December 9, 2013