In 2009, after the residential mortgage market had pretty clearly collapsed, people began worrying about commercial mortgages. Although bad subprime mortgages were responsible for popping the housing bubble, it continued to rapidly deflate when prime mortgages also began to default as the recession deepened and unemployment grew. Those same recessionary pressures began weighing on businesses, so some hypothesized that a commercial mortgage market collapse might be next. Delinquencies began rising and some thought those fears were confirmed. But the market appears to be healing.
The easiest way to determine if things are getting better would be to look at delinquencies. Here are some measures:
Let's look at each of these lines. First, the green one shows commercial mortgage-backed securities (CMBS) portfolios and includes the earliest-term delinquencies. Although they continue to rise, they're doing so consistently more slowly, as the distances between each point have been decreasing for about a year. The red line is the most severe delinquencies, as 90 days or more delinquent means that the properties are essentially defaulted. Its story is similar, as delinquencies have continued to grow, but not as quickly as they had in prior quarters. Finally, delinquencies on 60 or more day multi-family portfolios owned by Fannie Mae actually declined during the quarter.