NEW YORK– The delinquency rate on commercial MBS continued its ascent during October.
According to the Trepp CMBS Delinquency Rate measurement, the rate began to rise in March as loans from the 2006 and 2007 vintages started to reach their maturity dates, which has caused the reading to move higher in seven of the last eight months. The delinquency rate for US commercial real estate loans in CMBS is now 4.98%, an increase of 20 basis points from September, according to Trepp.
“The rate is now only 25 basis points lower than the year-ago level,” Trepp reported. “At one point this year, the rate was showing a year-over-year improvement of 143 basis points. The delinquency reading is now 19 basis points lower since the beginning of the year. The rate hit a multi-year low of 4.15% in February 2016. The all-time high was 10.34% in July 2012.”
According to Trepp, in October, CMBS loans that were previously delinquent but paid off with a loss or at par totaled about $820 million. Removing these previously distressed assets from the numerator of the delinquency calculation helped move the rate down by 18 basis points. Almost $500 million in loans were cured last month, which helped push delinquencies lower by another 10 basis points, the company said.
It added, however, that more than $1.9 billion in loans became newly delinquent in October, which put 42 basis points of upward pressure on the delinquency rate. A reduction in the denominator due to the maturation of performing loans accounted for the remainder of the difference.