CMBS Delinquencies Predicted to Reach Near “Great Recession Peak”
April 9, 2020 | Mack Burke | Commercial Observer
The mortgage-backed securities sector has been rocked by the economic fallouts from measures to contain the novel coronavirus, and while the delinquency rate for loans in CMBS has been on a steady decline over the last several months, it’s expected to skyrocket to reach levels not experienced since the Great Recession, according to analysis released today by Fitch Ratings.
The overall delinquency rate was one basis point over 1.3 percent at the end of last month, but Fitch expects that figure to climb rapidly and eventually top out at around 8.25 percent to 8.75 percent by the end of the third quarter of this year. This projection nearly matches the 9.01 percent peak delinquency rate that was reported in July 2011, on the back end of the impacts of the 2008 financial crisis; the all-time high CMBS delinquency rate of 10.34 percent was reported in July 2012, according to data from Trepp released last fall. Since July 2017, the overall delinquency rate has been on a consistent downward trend.
Right now, loan servicers are being flooded with relief requests from borrowers who are still struggling to handle their debt obligations due to the cessation of business activity while the sector continues to labor without necessary monetary assistance from the federal government—the sector was excluded from the first rounds of federal aid that have been pumped into the economy.
