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Fitch Ratings Says Recession Would Double CMBS Loan Delinquency Rate

Higher risk will demand larger returns that depend on higher commercial mortgage rates.

Fitch Ratings expects the US CMBS loan delinquency rate to increase from the 1.89% of October 2022 to between 4.0% and 4.5% by the end of 2023. The causes, according to the firm, are higher interest rates, persistent inflation, and weak economic growth, with a mild recession starting in the middle of next year.

“Fitch expects higher delinquency rates for all major property sectors next year,” the firm wrote. “Retail and hotel rates, which are the highest across all property types, will increase further, and multifamily, office and industrial rates will exceed their pandemic peaks.”

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Erik Sherman

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