CMBS Delinquency Rate Rises For First Time In 6 Months: What You Need To Know

The delinquency rate for commercial mortgage-backed securities (CMBS) took a rare upswing in June, marking the first time since last December and only the second time in two years that the rate increased, according to new data from Trepp LLC.

What Happened: The Trepp CMBS Delinquency Rate in June was 3.2%, a six-basis-point rise from May, with all major property types recording small increases in their respective delinquency rates. The percentage of loans in the 30 days delinquent bucket is now 0.18%, a five-basis-point rise from the previous month.

Still, June’s delinquency rate was far below the all-time high of 10.34% from July 2012 and the pandemic-era high of 10.32%. On a year-over-year measurement, the overall CMBS delinquency rate plummeted by 295 basis points, while the year-to-date decline is a 137-basis-point drop.

“Last month, the Trepp team asked rhetorically if market volatility, inflation and interest rates over the last three months would cause a slowing of the rate of improvement in CMBS delinquency levels,” said Manus Clancy, senior managing director and the leader of applied data, research and pricing departments at Trepp.

“One month’s data is too small a data point to call the increase a trend, but the direction of the delinquency number over the next few months will give a sense of the impact of recent events on the overall CMBS market.”

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What Else Happened: Within the different commercial real estate sectors, the retail delinquency rate saw the greatest uptick with a 12-basis-point rise to 6.69%. The industrial delinquency rate moved up 11 basis points to 0.49% and the lodging delinquency rate also rose by 11 basis points to reach a 5.94% level.

Lower increases were recorded in the multifamily sector, where the delinquency rate inched up one basis point to 1.03%, and in the office sector, where the delinquency rate moved up five basis points to 1.68%.

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Photo: Jason Goh/Pixabay.