Commercial Delinquencies for Credit Unions & Others Rise in Q1

Credit union loan delinquencies rose again in the first quarter, following a pattern among banks and commercial investors.

Among credit unions, the delinquency rate for commercial real estate loans was 0.73% on March 31, up from 0.21% a year ago and 0.48% Dec. 31, according to NCUA data gathered from Callahan & Associates / Peer Suite.

The NCUA data analyzed by CU Times showed the rates were higher for commercial lending not backed by real estate, pushing the overall commercial delinquency rate to 0.84% on March 31, up from 0.34% a year earlier and 0.60% on Dec. 31.

A report Tuesday from the Mortgage Bankers Association showed delinquency rates rising from December to March at four of the five investor types it tracks, which together hold about 80% of the nation’s commercial real estate balance.

“The increase was seen across most capital sources, pointing to the challenges caused by loans that are maturing amid higher interest rates, uncertain property values, and questions about some properties’ fundamentals,” Jamie Woodwell, the MBA’s head of commercial real estate research, said.

The MBA’s Commercial Delinquency Report found:

• For commercial mortgage-backed securities, the 30-day-plus delinquency rate was 4.35% on March 31, up from 3.00% a year earlier and 4.30% Dec. 31.
• For life insurance companies, the 60-day-plus delinquency rate was 0.52% on March 31, up 0.21% a year earlier and 0.36% Dec. 31.
• At Fannie Mae, the 60-day-plus delinquency rate was 0.44%, up from 0.36% a year earlier and down from 0.46% Dec. 31.
• At Freddie Mac, the 60-day-plus delinquency rate was 0.34% on March 31, up from 0.13% a year earlier and 0.28% Dec. 31.
• At banks, the 90-day-plus delinquency rate was 1.03% March 31, up from 0.58% a year earlier and 0.94% Dec. 31.

Woodwell said the rise in delinquency rates for commercial mortgages at banks was driven by banks designating non-multifamily loans – in particular, office – as “nonaccrual,” meaning the loan may still be current on payments, but the lender does not expect to be paid in full.

“The increases in such loans, and the associated net-charge-offs at large banks, can be seen as evidence of the institutions working to get ahead of potential future defaults,” he said.

NCUA data showed credit unions held $149.1 billion in commercial real estate loans on March 31, up 10.4% from a year earlier and 0.8% from three months earlier.

Commercial lending not backed by real estate was $11.9 billion on March 31, up 9.3% from a year earlier and down 0.7% from Dec. 31.