US Commercial Mortgage Delinquency Hits 4.7%

OAKLAND, CA-The total delinquency rate for commercial mortgages expanded 60 basis points in the third quarter to 4.7%, according to an early estimate by locally based Foresight Analytics. While final figures for the third quarter are not due out until late November, the real estate market analysis and forecasting specialist uses earnings reports and call report filings from many smaller banks to produce its quarterly estimates.

The commercial mortgage delinquency rate has been rising at an accelerated rate ever since Lehman Brothers’ collapse in September 2008 and the ensuing severe credit crunch and economic downturn. While more than double the commercial mortgage delinquency rate from the same year-earlier period, the 4.7% delinquency rate is still well below the 8% rate in the third quarter of 2001. However, given a weak economy, severely constrained credit availability and a high volume of commercial mortgages coming due during the next several years, Foresight Analytics principal Matthew Anderson calls the increasing delinquency rate “worrisome.”

The delinquency rate for other commercial and industrial loans–loans to businesses typically unsecured and separate from commercial mortgage lending–rose 50 basis points in the third quarter to 4.2%. Anderson says the rate has been trending up by 50 basis points a quarter as the weak economy and reduced credit availability have put pressure on borrowers’ finances.