NEW YORK CITY—With the wave of maturities from the peak of CMBS origination set to begin rolling in this year, it's a positive development that the delinquency rate for securitized loans continues to fall. Trepp says December's late-pay rate marked another five-basis-point decline from November—which already marked the lowest level in five years—bringing the year-end delinquency rate to 5.75%, down 168 basis points over the past 12 months.

“2014 was another great year in terms of seeing the delinquency rate fall,” says Manus Clancy, senior managing director at Trepp. “Special servicers resolving delinquent loans certainly had a lot to do with that, but low interest rates, tight CMBS spreads and plenty of funding sources also helped.”

That being said, there could be storm clouds forming on the horizon. A new study from Standard & Poor's reports that conduit/fusion CMBS loans from the 2006, 2007 and 2008 vintages have the highest total transaction projected losses at more than 10%, with the 2005 vintage not far behind at over 6%. The next three years will see more than $300 billion in conduit loans reach maturity, Trepp said last month, with many of these loans originated between '05 and '07.

Nearer term, Clancy says that arguments could be made for the delinquency rate “going either up or down” over the next 12 months. 'If you believe that the wave of '05 vintage loans will have a much harder time than the class of 2004, you probably believe rates are heading back up,” he says. “The same goes if you believe there will be a spike in the 10-year Treasury rate. If neither of those factors come to pass, the rate should continue to fall.”

Regardless, Trepp notes that the CMBS market is heading into the new year with “a lot of momentum.” New issuance lagged most projections for much of '14, but a surge in the second half of the year helped the market reach almost $100 billion in deals, thereby leading many lenders to predict that issuance will finally crack that barrier this year. “With the 10-year Treasury hovering in the low 2% range and CMBS spreads remaining fairly steady in recent months, the CMBS market should kick off 2015 in fine form,” according to Trepp.

 Among the major property types, the lodging sector saw the biggest year-over-year improvement in delinquency: 314 bps, closing out December at 4.77%. The sector also recorded the best month-over-month improvement at 20 bps.

Retail's Y-O-Y improvement was the smallest at just 40 bps. However, with the late-pay rate for retail CMBS now standing at 5.66%, the sector is in better shape than any aside from lodging.

The delinquency rates for industrial, office, and multifamily loans improved by 291, 205, and 201 bps, respectively. However, on a month-over-month basis industrial's late-pay rate ticked up two bps to 7.55%, as did multifamily's, with apartments remaining the worst-performing sector at 8.85% delinquency. Office, meanwhile, ticked downward by 13 bps from November to 6.08%.

There are now $30.2 billion of in delinquent loans, Trepp says, a figure that's about $500 million lower than a month earlier. The number excludes loans that are past their balloon date but are current on their interest payments.