Moody’s Expects US CMBS Delinquencies to Reach 5-6% (by the end of this year)

Research Recap ^ | 07/14/09

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Moody’s Expects US CMBS Delinquencies to Reach 5-6%

Moody’s now expects the aggregate rate of delinquencies among US Commercial Mortgage-Backed Securities to reach 5% to 6% by the end of this year.

Moody’s latest CMBS Delinquency Tracker (DQT) records the aggregate rate of delinquencies among US CMBS conduit and fusion loans at 2.67%, based on data through the end of June. This represents a 40 basis point increase from the prior month’s 2.27% rate.

By comparison, the DQT was 0.46% a year ago and is now 245 basis points above the low of 0.22% measured in July 2007.

"Hotels saw the greatest month-to-month increase in delinquencies, with the rate rising during June to 3.26% from 2.02%."

By contrast, the multifamily delinquency rate, which has had the greatest increase over the last two years, showed virtually no movement in June, ending the month at 4.58% compared with 4.56% a month earlier.

“The short-term nature of apartment leases has caused multifamily delinquencies to ramp up earlier and more sharply than the other property types,” says Nick Levidy, a managing director in Moody’s CMBS group. “However, just as the sector has led on the downside, we expect that it will lead the upturn as consumer sentiment begins to improve. That said, we think that the multifamily sector is likely to see higher delinquency rates in the months ahead.”

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