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Bank Default Rates on CRE Loans Projected to Hit 4% in Fourth Quarter

Published Tuesday, December 01, 2009

Deterioration in property cash flow, erosion of reserves to cover shortfalls in debt service and little credit to refinance maturing mortgages all contributed to a higher default rate on commercial real estate mortgages held by depository institutions in the third quarter. That’s according to New York-based Real Estate Econometrics, which analyzed data recently published by the Federal Deposit Insurance Corp. (FDIC). The national default rate rose to 3.4% in the third quarter, up from 2.88% in the second quarter. Meanwhile, the national multifamily mortgage default rate jumped from 3.14% to 3.58% over the same period. The ...

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