{"id":183138,"date":"2025-06-04T12:39:19","date_gmt":"2025-06-04T18:39:19","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=183138"},"modified":"2025-06-17T14:47:25","modified_gmt":"2025-06-17T20:47:25","slug":"delinquency-rates-show-stress-in-the-multifamily-market","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/delinquency-rates-show-stress-in-the-multifamily-market","title":{"rendered":"Freddie Mac’s Serious Delinquency Rates Are Down, While Multifamily Distress is the Highest Since 2011"},"content":{"rendered":"\n

There’s some good news regarding late mortgage payments. Freddie Mac, the government-affiliated home loan backer, reported that serious delinquencies for single-family homes\u2014individuals three months or more behind on their mortgage payments\u2014<\/span>decreased in April compared to March<\/span><\/a>. <\/span><\/p>\n\n\n\n

The Slide Into Foreclosures for Single-Family Homes Appears to Have Eased<\/span><\/h2>\n\n\n\n

The exact numbers that have dropped might appear small\u20140.57% in April, down from 0.59% in March\u2014but the trend is promising, considering mortgage delinquencies were far lower in the same period in 2024, at 0.51%. The<\/span> gradual increase<\/span><\/a> at that time had many people concerned about a slide into foreclosures. At least temporarily, that pattern appears to have been halted, with delinquencies still below the pre-pandemic level of 0.60%.<\/span><\/p>\n\n\n\n

To provide some context, Freddie’s serious delinquency rate peaked in February 2010 at 4.20%, following the financial crash <\/span>of 2008<\/span>, and rose again in 2020 during the pandemic.<\/span><\/p>\n\n\n\n

Traditionally, for investors with cash, when defaulted mortgages are at their highest is when the most deals are available, which proved to be the case after the housing bubble of 2008. However, in 2008, it was also <\/span>extremely difficult<\/span> to get a mortgage, as the lending criteria had tightened.<\/span><\/p>\n\n\n\n

Freddie’s sister company, Fannie Mae, reported similar numbers: The single-family serious delinquency rate in April was 0.55%, down from 0.56% in March. However, the serious delinquency rate is slightly up year over year from 0.49% in April 2024.<\/span><\/p>\n\n\n\n

A Decline in House Prices<\/span><\/h2>\n\n\n\n

The current market indicates some stability is returning despite the volatile nature of the housing industry, particularly with interest rates remaining high, which has encouraged homeowners with low rates to stay put. <\/span>Those owners are likely sitting on a <\/span>lot<\/span> of <\/span>equity<\/span><\/a> with a comfortable interest rate, which would <\/span>point toward<\/span> stability in the lending market without people taking on new debt.<\/span> <\/span><\/p>\n\n\n\n

This<\/span> is borne out by the data, with loans originating during the low-rate era (2009-2023, accounting for approximately 98% of Fannie Mae’s portfolio) showing a serious delinquency rate of 0.5%, which is lower than the current single-family serious delinquency rate.<\/span><\/p>\n\n\n\n

One of the main reasons for the drop in delinquencies could also be the decline in house prices, particularly condos. Technology and data site ICE (Intercontinental Exchange) revealed in its<\/span> April 2025 report<\/span><\/a> that annual home price growth has decelerated to 2.2% in March.<\/span><\/p>\n\n\n\n

Said Andy Walden, head of mortgage and housing market research for ICE:<\/span><\/p>\n\n\n\n

“Analysis of ICE HPI data shows a broad-based cooling of home prices, with 90% of U.S. markets experiencing slower home price growth compared to three months ago. This trend is <\/span>being driven<\/span> by improved inventory levels, which are up 27% over last year, and stabilized mortgage rates, which dipped below 6.6% in early March and have been holding in the 6.6%-6.7% range.”<\/span><\/em><\/p>\n\n\n\n

Walden continued: <\/span><\/p>\n\n\n\n

“Early March data shows condo prices dropping for the first time in more than a decade, with the largest impacts in the Sunbelt, most notably in Florida\u202695% of U.S. markets <\/span>have experienced<\/span> at least slight improvements in affordability compared to a year ago.”<\/span><\/em><\/p>\n\n\n\n

Multifamily Delinquencies Are the Highest Since 2011<\/span><\/h2>\n\n\n\n

The <\/span>multifamily<\/span><\/a> delinquency rate, specifically the serious delinquency rate for loans Fannie Mae has on one-to-four-unit residential properties, has reached its highest level\u20140.63%, unchanged from February\u2014since March 2011, excluding the pandemic period, according to the<\/span> CalculatedRisk newsletter<\/span><\/a>, which crunched Fannie and Freddie data. Freddie Mac’s data followed a similar path.<\/span><\/p>\n\n\n\n

Commercial real estate<\/span><\/a> data and analytics site<\/span> Trepp<\/span><\/a> showed that the delinquency rate in this sector (commercial mortgage-backed securities) rose in April, up 38 basis points to 7.03%. <\/span>In April, the overall delinquent balance was $41.9 billion <\/span>versus<\/span> $39.3 billion in March.<\/span> <\/span><\/p>\n\n\n\n

According to<\/span> Multi-Housing News<\/span><\/a><\/em>, the Mortgage Bankers Association estimates that nearly $1 trillion worth of multifamily loans will mature this year. High interest rates spell problems for borrowers and lien holders if <\/span>the loans cannot be refinanced<\/span>.<\/span><\/p>\n\n\n\n

Community banks have been hit particularly hard, according to real estate data and research site <\/span>CRED iQ<\/span><\/a>. Its February report shows that over $6.1 billion of community bank loans secured by apartment buildings are delinquent, yielding a 0.97% delinquency rate, based on a total multifamily loan amount of $629.7 billion. The last time there were over $6 billion of delinquent apartment loans held by community banks was in March 2012.<\/span><\/p>\n\n\n\n

However,<\/span> Cred IQ’s<\/span><\/a> data was more encouraging for April, with the overall distress rate dropping 410 basis points. The delinquency rate <\/span>dropped<\/span> 220 basis points to 9.7%. Multifamily housing is far from being out of the woods, though, as 63.1% of CRE CLO (collateralized loan obligation) loans have surpassed their maturity date, down from 69.5% the month prior. <\/span>In fact,<\/span> 36.6% <\/span>are classified<\/span> as “performing matured,\u201d down from 37.3%. <\/span><\/p>\n\n\n\n

What does this mean? Many borrowers are exercising extension options or negotiating month-to-month arrangements to avoid default.<\/span><\/p>\n\n\n\n

Final Thoughts<\/span><\/h2>\n\n\n\n

Most problems homeowners and investors <\/span>are facing<\/span> in the current market <\/span>are tied<\/span> to <\/span>interest rates<\/span><\/a>.<\/span> While single-family delinquencies may be marginally down, this is <\/span>due in part<\/span> to a decline in home prices and sellers in some markets deciding to stay put until rates decrease.<\/span><\/p>\n\n\n\n

The multifamily market tells another story. Many borrowers initially financed at low rates are encountering problems when they cannot <\/span>refinance<\/span><\/a>. <\/span>Often, buying multifamily housing involves borrowing money to perform repairs <\/span>to<\/span> increase rents and refinance the debt into a lower-rate mortgage, which many investors had been predicting would occur following talk of the Federal Reserve’s rate reduction.<\/span> However, that hasn’t been the case, and now many investors are falling off a financial cliff.<\/span><\/p>\n\n\n","protected":false},"excerpt":{"rendered":"

There’s some good news regarding late mortgage payments. Freddie Mac, the government-affiliated home loan backer, reported that serious delinquencies for single-family homes\u2014individuals three months or more behind on their mortgage […]<\/p>\n","protected":false},"author":613725,"featured_media":183144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-183138","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/183138","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=183138"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/183138\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/183144"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=183138"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=183138"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=183138"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}