Higher interest rates, persistent inflation and weak economic growth will contribute to more maturity defaults in 2023, according to Fitch Ratings. Fitch projects its U.S. CMBS loan delinquency rate will increase to between 4.0 percent and 4.5 percent by YE 2023 from 1.89 percent as of October 2022.

In the retail sector, Fitch expects the bulk of maturing Class B and C mall loans will default next year. However, it states that servicers may grant modifications in cases where the borrower remains committed. Tenant demand for industrial space will soften and rental growth will moderate as new supply increases and tenants scale back on space, according to the report.

Fitch forecasts that the U.S. economy will enter a mild recession in mid-2023.

Last Updated on December 23, 2022 by Ramin Seddiq