For those who are considering a new commercial real estate loan, it is important to know that commercial-backed securities (CMBS) are experiencing historically high delinquency rates. Not only will this affect future interest rates, it may mean that banks and other financial institutions will be tightening their belt and approving fewer loans regardless of the borrower’s past history or ability to repay the loan.

The overall delinquency rate has climbed from a relatively normal 2.77% last year to the historical high of 8.42% in May, 2010. For, seriously delinquent loans (this figure eliminates anything under 60 days past due) the current figure is 7.55% while last year’s rate was 2.18%. Fitch Ratings forecasts that this trend will continue through the end of 2010 and will exceed 11% by the end of December.

Specific property types can be broken down further. Hotels were by far the biggest culprits with a CMBS delinquency rate of 18.45% in May. This is up from their 17.16% rate that was reported in April. Multifamily properties did not fare well either. Their delinquency rate rose a whopping 28 basis points climbing from 13.06% in April to 13.34% in May. Office properties continued the trend with their delinquency rate rising from 5.37% in April from 5.81% in May, while retail delinquencies followed suit with a climb to 6.86% in May from the lower 6.44% measured in April.

When looking at default rates, the numbers are equally troubling. Large loan defaults (loans over $50 million) rose to 56 in 2009 from a mere 5 in 2008. Relatively smaller loans experienced their share of defaults as well. The vast majority of the defaults in all CMBS loans are concentrated in those that were originated in recent years. Due to the large numbers of hotel loan that were made in recent years, analysts are predicting particularly high default rates in that category over the next year. They are expecting the problems to be concentrated in projects related to luxury hotels, resort destinations, and hotels used primarily for conventions and group meetings.

With numbers like these, it is easy to understand why lenders might be watching their current loans very closely, as well as analyzing any potential loans for future default possibilities. For those planning a new commercial real estate venture that will require financial backing, the future may find that new commercial loans with attractive terms may be hard to come by.