Mortgage Delinquencies Reach New Lows

Residential and commercial mortgage delinquencies have dropped significantly

Mortgage Delinquencies Reach New Lows
September 13, 2016

According to MGIC Investment Corporation, the rate of mortgage delinquencies has dropped in a number of areas recently. The company, which provides private mortgage insurance (PMI), reported that delinquencies have dropped by more than 20 percent. Meanwhile, the Mortgage Bankers Association (MBA) reports that the same is true of mortgages made to purchase commercial and multifamily dwellings.

The Association's Commercial/Multifamily Delinquency Report gathered information from several of the biggest investor groups in the country, including mortgages, banks, life insurance providers, Freddie Mac, and Fannie Mae. These groups combined hold more than 80 percent of the mortgage debt that was borrowed for multifamily dwellings or commercial businesses. It is worth noting that these numbers do not include any loans made for construction or land development, even though those loans are often included under the definition of commercial real estate loans.

Because the delinquency rates of multifamily units and commercial businesses are not measured the same across the board, it is virtually impossible to compare how these different investor groups differ from one another. However, the delinquency rates can be looked at in terms of the historical averages of each investor group, which can provide a pattern for the overall delinquency of these types of mortgages.

In general, the delinquency rates have dropped to 20-year lows. Among the reasons for this, MBA Vice President of Commercial Real Estate Research Jamie Woodwell stated, is that property values have increased, solid mortgages are easily available, and borrowers have clear fundamental ideas of how to develop the property.

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