Commercial real estate was the looming problem that everybody seemed to forget about in early 2010. New delinquency data from the first quarter shows that it's time for a reminder. Delinquencies soared in the early part of the year, according to the Mortgage Bankers Association. Loans contained in commercial mortgage-backed securities (CMBS) 30-or-more days delinquent reached a new high of 7.24% last quarter -- up substantially from 5.70% in the fourth quarter of 2009. This marks another sobering economic indicator.
Here's a chart based on some figures the MBA's report provides:
Let's start with the green line -- 30+ day delinquencies. As noted, those continue to rise -- a lot. In the past year, they've risen from 1.86% to 7.24%. That's incredible. Businesses are still clearly having big trouble paying their mortgages.
But how severe is the problem? The first stage of delinquency isn't good, but it isn't yet reason to panic. Unfortunately, the later stage delinquencies appear to be rising as well. The measure of 60+ day delinquencies shown (gold line) is that for Fannie Mae's portfolio of multi-family loans it holds or insures. It's up to 0.79%, which is also a big increase from its rate of 0.34% from a year ago. And remember, if Fannie owns a loan, then it should be relatively pristine. Yet, these delinquencies are rising too.
