Posts Tagged ‘commercial mortgages’

Real Estate Econometrics, a property research firm, has estimated that default rates in commercial mortgages will rise to 4.1%, a 17-year high, in the fourth quarter of this year. Commercial mortgages are defined as loans on non-farm, non-residential buildings such as offices, retail centers, and warehouses. A loan is considered delinquent when it’s 30 to 89 days late while a default is said to have occurred when a loan is 90 or more days past due. The market for refinancing has been hit as the recession has taken its toll on rents. “The dramatic decline in real economic activity and labor markets since last September has undercut property fundamentals. The decline puts an increasing number of loans at risk,” said Sam Chandan, chief economist of Real Estate Econometrics. Commercial mortgage defaults already are at a 15-year high after climbing to 2.3% in the first quarter of this year. Real Estate Econometrics projects the default rate on commercial mortgages will reach 5.3% in 2011 before starting to decline.