Overdues on securities backed by multifamily and retail commercial loans climbed 29 basis points in May to 2.07%, according to Fitch Ratings — the highest percentage of delinquencies since the company created a tracking index back in 2001.

Fitch cited "large loan defaults coupled with declining performance on multifamily and retail properties" as a reason for the increase.

Even though the late payment rate might appear alarming to some, it is much smaller than the residential delinquency rate, which is in the double-digits.

Also, outstanding commercial mortgage debt is much smaller, in terms of dollars, than residential debt.

Fitch noted "Defaults on larger loans continue to drive delinquency increases because later vintage transactions have larger loans, many underwritten with now unrealized pro forma income, as well as now-depleted debt service reserves and high leverage."

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