CMBS delinquencies will head to 4.50% in 2024 and 4.90% in 2025, according to Fitch Ratings. That would be up from 2.25% in November 2023. Pandemic and historic peaks were 5.0% and 9.0%.
"The projection incorporates more maturity defaults from higher interest rates, tighter access to capital, fewer special servicing resolutions, less new issuance and increased loan modification activity," the firm wrote.
All the major product types will see higher delinquency rates this year, according to Fitch. Office, currently at 3.48% delinquency, is expected to hit 8.1% this year and 9.9% in 2025. Its pandemic peak was 2.8% and historic peak, 8.8%. That's more than doubling the recent rate. The reason for the estimate is hybrid work that "negatively affects property valuations and performance."
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