The national default rate for commercial real estate mortgages held by depository institutions rose from 2.25% in the first quarter to 2.88% in the second quarter, according to Real Estate Econometrics' third-quarter trends update.
The company projects the default rate for bank-held commercial mortgages to rise to 4.2% by year-end, peaking in 2011.
‘The largest losses will occur at regional and community banks, principally due to higher concentrations in commercial real estate. At 28.4 percent, commercial real estate concentrations are greatest among banks with $100 million to $1 billion in assets," a Real Estate Econometrics statement says.
The balance of commercial mortgage loans 30 to 89 days past due fell by just under $2 billion between the first and second quarters, from $14.7 billion to $12.8 billion.
However, the balance in default, which includes mortgages 90 days or more past due and loans in non-accrual status, increased by $7.1 billion, or 29.2%, to $31.3 billion.
SOURCE: Real Estate Econometrics