Problems with commercial real estate sent commercial mortgage bond delinquencies higher in December, according to Fitch Ratings that warned that the number of problem loans will only increase over the next two years.
Fitch said on Monday that defaults among all property types led to a 42 basis point increase in U.S. CMBS delinquencies to close out 2009 at 4.71%, according to the credit rating agency’s latest loan delinquency index results.
“Though delinquencies have increased approximately five times from a year ago, they may not peak until 2012,” says Fitch. “An increased amount of loans are coming due over the next two years that will result in delinquencies possibly peaking at 12%.”
Of the five main property types, each has seen an increase in delinquencies of over 195% since December 2008, ranging from multifamily with a 196% increase, to hotels, with a 1,175% increase.
Fitch said that in December there were 25 delinquent loans greater than $100 million, compared to four in December 2008. An increased number of loans with larger balances were securitized in 2006 and 2007, when underwriting was most aggressive, the rating agency says.