NEW YORK CITY-The default rate for commercial mortgages is now the highest since 1992 and is likely to surpass the previous record, according to an analysis of bank and FDIC data by Real Capital Analytics. However, the quarterly rise in volume of commercial mortgage defaults is the smallest in a year.
At the end of the first quarter of 2010, the default rate stood at 4.17%, or $45.5 billion, up 192 basis points year over year and second only to the 4.55% record set in 1992. By year’s end, it’s projected to surpass the ’92 record and peak at 5.4% in 2011, according to RCA.
In the multifamily sector, the default rate is even higher, as is the year-over-year increase: 4.62% or $9.9 billion at the end of Q1, an increase of 219 basis points. That represents an all-time high, surpassing the 4.17% level set in 1993, RCA says.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
