January 6, 2020
Although delinquency rates are low overall in bank portfolio loans for commercial real estate, multifamily and construction, construction loan delinquencies have shown steady increases over the past four quarters, according to Trepp data.
The 90-days-plus delinquency rate for construction debt was 0.19% as the second quarter of 2019 ended, according to Trepp. Construction loans represent 23% of the debt measured by the Trepp Anonymized Loan Level Repository (T-ALLR) Benchmark Report.
“Overall credit performance for bank portfolio loans remains strong with delinquency rates very near historical lows, especially for loans on multifamily properties,” wrote Trepp’s Russell Hughes. “But, we have observed another uptick in delinquencies for construction loans, pushing the 90+ rate to the highest sustained level since early 2014.”
Income-producing CRE is the largest segment with $83 billion in active loans and a delinquency rate of 0.07%. Multifamily loans, which represent nearly a third of the $167 billion in outstanding loans measured by the T-ALLR, had a delinquency rate of 0.06%.
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