NEW YORK CITY—CMBS offered its own version of the October surprise by posting an unexpected uptick in the delinquency rate. Trepp LLC says the increase of 11 basis points for October was the largest upturn in CMBS late-pays in more than two years, while the current delinquency rate of 6.14% is the highest since this past May.

On the other hand, Trepp notes that October's rate is 184 bps lower than the year prior. Year-to-date, delinquencies have fallen 129 bps from 7.43% at the end of December 2013. Additionally, Trepp says the the total amount of delinquent loans remained flat month-over-month, at $38.1 billion, despite an uptick in new delinquencies.

“Considering the aggressive rate at which special servicers have been burning off loans in distress over the past two years, it was inevitable that the delinquency rate would start to level off,” says Manus Clancy, senior managing director at Trepp. “We expect more muted gains over the next few months than we grew accustomed to in '13 and early 2014.”

Research analyst Joe McBride notes that the liquidation of distressed CMBS loans has slowed down markedly over the past six months. The average volume of loans liquidated with losses over the past six months is $1.05 billion per month, a significantly lower level than the $1.54-billion average that was seen six months prior. The slower resolution of distressed loans, paired with a slight uptick in new delinquencies and more healthy loans paying off, have combined to slow the ever downward march of the delinquency rate.

With the exception of the office delinquency rate, all readings by major property type worsened in October. Multifamily's delinquency rate increased 81 bps in October to 9.80%, securing its position as the worst performing property type. At 29 bps, lodging CMBS saw the second greatest month-over-month increase, but hotels remain the best performing property type, with a late-pay rate of 5.35%.

Taking a longer view—a quarterly view, in fact—Fitch Ratings reports that legacy US CMBS performance has continued to stabilize while new deal volume has increased, along with leverage. Those are among the findings in Fitch's latest CMBS quarterly index.

Loans originated in 2004 are of particular interest, Fitch says. Approximately $2.3 billion in loans issued within this vintage repaid, defeased or were otherwise resolved during the third quarter. Accordingly, the remaining delinquencies and specially serviced loans as a percentage of '04-vintage deals jumped to 20.33% and 20.43% as of Sept. 30. That compares to 10.14% and 14.18% as of June 30.

“The remainder of 2004 CMBS loans are still susceptible to adverse selection,” says Mary MacNeill, managing directior with Fitch. In terms of absolute dollars, delinquent '04 loans increased 22% in Q3 compared to Q2, while specially serviced '04 loans actually decreased 12%.

Meanwhile, even as CMBS loans of '04 and earlier suffer from concentration issues, metrics on deals from the peak of the cycle—2005 to 2007—improved slightly last quarter. The dollar amount of delinquencies fell 1.3% on the quarter, while the dollar amount of loans in special servicing fell by 3.5%, says Fitch.