Key credit indicators for securitized commercial mortgages continued to strengthen in July, led by a big improvement in hotel performance. Analysts cautioned, however, that further recovery could be impeded by a rise in coronavirus cases tied to the delta variant. The 60-day delinquency rate among nearly $520 billion of loans tracked by Fitch fell 22 basis points (bp) to 3.59%, as the total volume of outstanding commercial MBS loans rose 1.1%. The volume of newly delinquent mortgages fell to $853 million in July, from $1 billion the month before. Hotel delinquencies fell 169 bp to 13.61%, the sector’s best reading since June 2020. Leisure travel continued to pick up.
Stephanie Duski, a director in Fitch’s CMBS surveillance unit, said she expects the two sectors hardest hit by the pandemic — hotel and retail — will continue to improve. “The figures ebb and flow with how quickly the economy recovers and fully reopens,” she said. “The hotel and retail figures have seen the bulk of the volatility, but the improving trends are likely to persist as overall sentiment and performance have improved.”