Dive Brief:

  • Multifamily commercial mortgage-backed securities loan delinquencies for apartments jumped 98 basis points in March to 5.44%, according to a report from data firm Trepp.
  • A year ago, the delinquency rate for apartments was 1.84% — meaning it has risen 360 basis points over the past 12 months. The March rate is the highest since December 2015, when it was 8.28%.
  • A separate report from Cred iQ said the multifamily distress rate fell 10 basis points to 12.9% in March. Apartments rank as the second most distressed asset type behind offices.

Dive Insight:

The Trepp CMBS Delinquency Rate for commercial real estate increased 35 basis points to 6.65% in March. The overall balance was $39.3 billion, up from $36 billion in February. After retreating for the last two months, the rate is at a nearly four-year high.

Cred iQ saw the overall CMMS distress rate for CRE decline for the second straight month, dropping 20 basis points to 10.6%. Delinquencies decreased 10 bps to 7.9% in March, while the special servicing rate fell 40 bps to 9.7%. Those figures stood at 5.4% and 7.4%, respectively, a year ago.

Multifamily continues to be a trouble spot, according to Cred iQ. In a recently released analysis of fourth-quarter 2024 loan data, the research firm noted that apartment loan delinquencies at community banks jumped 39% from Q3 to Q4 2024.

Total delinquent loans increased by $2.38 billion in Q4, hitting $8.49 billion by year-end. By comparison, that figure was $1.98 billion in Q2 2023.

Loan losses also rose at community banks, according to Cred iQ. In 2023, those lenders took a $305.8 million hit on apartment loans, a 411% jump compared to 2022. In 2024, losses skyrocketed another 126% to $691.8 million.

“The uptick in delinquencies and losses points to broader challenges: rising interest rates, softening rents or maybe even over-leveraged borrowers,” according to the Cred iQ report. “Whatever the culprits, the numbers don’t lie — this is a trend worth watching.”

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