CHICAGO—In this, the year of 10-year maturities of 2007-vintage CMBS transactions, Morningstar Credit Ratings LLC expects the delinquency rate to rise after finishing 2016 with a year-over-year decline of 43 basis points. This assessment goes hand in hand with the ratings agency's projection of a substantial drop in the payoff rate for securitized commercial mortgages.

“With many of the maturing loans overleveraged and lenders being more conservative, we expect the maturity payoff rate to fall further because loans issued in '07 were often originated under more aggressive terms than those of 2006-vintage loans,” according to a Morningstar report. “We project that only about 50%-60% of the nondefeased loans coming due in 2017 will be able to refinance, down from 75.6% in 2016.”

At year's end, the delinquent unpaid balance of CMBS amounted to $23.86 billion, up $357.1 million from the prior month and down 12.2% from a year ago. Also in December, the volume of newly delinquent loans rose to $1.65 billion from $1.33 billion the previous month. More than 50% of the newly delinquent loans were from of '07 vintage, nearly double that of the second-largest vintage, as loans originated in '06 were 25.6% of the newly delinquent balance.