Fitch Inc. said its loan delinquency index for commercial mortgage-backed securities rose 25 basis points last month from February, to 1.53%, as a result of declining multifamily and retail property performance.
The woes are expected to continue, especially for newer securities, which typically have loans with less principal paid down and higher exposure to properties that have not stabilized, Susan Merrick, the head of Fitch's U.S. commercial mortgage-backed securities group, said Monday.
Fitch said 202 loans worth $1.7 billion became delinquent last month. Excluding small-balance and B-note loans, the average size of those falling behind in March was $10.1 million.
The average loan balance continues to rise, according to Fitch. The average size of loans in traditional commercial mortgage-backed securities covered by the Loan Delinquency Index climbed by a third in six months, to $9.2 million last month.
Fitch said it expects loans secured by high-profile properties "will continue to default."
After a 48% increase in total delinquencies from a month earlier, the retail sector nearly matched multifamily properties as the leading property type within the index by balance, with $2.5 billion. Multifamily properties continued to have the highest delinquency rate (3.59%), followed by retail (1.79%), lodging (1.48%) and office (0.65%).
The index includes 1,270 delinquent loans worth $7.4 billion.
In recent months Fitch has observed an increase in the rollover rate, which measures loans that move from 30 to 60 days delinquent. The agency warned that loans 30 days delinquent in March, coupled with additional expected maturity defaults, could produce a record increase in the index this month.