Led by an increase in delinquency on multifamily and retail-backed loans, delinquencies in the commercial mortgage-backed securities sector edged up to 1.56% for the second quarter from 1.53% for the previous period, according to Fitch Ratings.However, if loans securitized after June 2003 are removed from the sample, the delinquency rate rises to 1.84%, the rating agency said. Fitch expects retail loan delinquencies to continue to rise over the next three to four quarters as rising interest rates help cool down consumer spending. One positive development is that hotel and industrial loans showed a decline in delinquencies for the second quarter. However, Fitch said it believes that the industrial sector is still not out of the woods. "The largest increase was in the multifamily sector," said Mary O' Rourke, a Fitch senior director. "Rising interest rates will stem the flow of multifamily tenants to the single-family market, although overbuilding in certain markets, such as Atlanta, Dallas, and Las Vegas, among others, is likely to keep the multifamily delinquency rate on the upswing for awhile."

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