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Fitch: CRE Credit Trends Expected to Continue Deteriorating
Credit trends in commercial real estate loans are expected to continue to deteriorate through 2025 for CMBS, U.S. banks and life insurers, but losses should remain within ratings sensitivities, Fitch Ratings said Thursday. Deterioration will be led by office properties, with weakening also expected across retail, hotel, multifamily, and industrial properties.
For U.S. CMBS, Fitch expects the greatest decline in property net cash flows from office and non-trophy malls as growing macroeconomic headwinds and high interest rates lead to increased maturity defaults. Fitch forecasts overall U.S. CMBS loan delinquencies to double from 2.25% in November 2023 to 4.5% in 2024 and 4.9% in 2025.
The U.S. CMBS office delinquency rate rose 64 basis points to 3.48% in November, the largest increase since June 2020, according to Fitch. The majority of the $1.59 billion in new Fitch-rated U.S. CMBS 60+ day loan delinquency volume in November comprised office and multifamily.
Fitch forecasts U.S. CMBS office loan delinquencies to reach 8.1% in 2024 and 9.9% in 2025 and U.S. CMBS multifamily loan delinquencies to increase from 0.62% in November 2023 to 1.3% in 2024 and 1.5% in 2025.
- ◦Financing
