June saw a significant drop-off in commercial mortgage-backed securities (CMBS) delinquencies with multifamily loans having a measurable effect on the decline. U.S. CMBS delinquencies fell to 1.10% at the end of June, down from 1.13% at the end of May according to Manhattan-based Fitch Ratings.
Fitch data also shows that multifamily delinquencies fell 6.7% during the month of June. That represented a $61.4 million decrease that was driven in large part by two 2000 vintage multifamily loans that were liquidated in June. Both liquidations added up to $4.3 million.
“Multifamily delinquencies fell to their lowest levels since December 2004. Despite slight increases in hotel, industrial and health care delinquencies, the significant drop in multifamily numbers drove the overall delinquency decline,” says Britt Johnson, a director at Fitch Ratings’ Chicago office.
She cautions that June is “only one month” therefore the decline may not have staying power. Still, Johnson is upbeat that the balance of the year should see a continuation of the trend. Her outlook hinges on steady demand from apartment renters, continued low interest rates and a growing economy.
Adds Johnson: “We’ve been very positive on the multifamily market’s prospects for a while.”