‘Foong on Finance’: CMBS Delinquency Rate to Stay in High-Single to Double Digits, Says Moody’s

Delinquencies rates remain high, though there is light on the horizon. The CMBS conduit/fusion delinquency rate is now 9.22 percent, an increase of six basis points, according to Moody’s Investors Service.

To place it in perspective, Fannie and Freddie’s multifamily delinquency rates come in below 1 percent, while the CRE delinquencies of life insurance companies are about 4 percent.

“We expect the delinquency rate to run high-single to low-double digits over the near term,” states Tad Philipp, director – CRE Research, of Moodys Investors Service. “The resolution process is in full swing, and liquidations should roughly balance new defaults.”

The total dollar balance of delinquent loans for the US declined for the second straight month in April. But CMBS conduit/fusion loans outstanding fell by over $5 billion in April, leading to the uptick in the delinquency rate.

During April, loans totaling $2.9 billion became newly delinquent, while previously delinquent loans totaling approximately $3.0 billion became current, worked out, or disposed of, says Moody’s. In all, the total number of delinquent loans decreased to 4,047 in April from 4,097 in March.