The Real Deal Miami

Commercial defaults could reach 17-year high

June 10, 2009 03:23PM

The default rate on
commercial mortgages held by U.S. banks may rise to the highest rate in 17
years in the fourth quarter as debt for refinancing remains scarce and
rents fall. The rate is expected to reach 4.1 percent by the end of the
year, according to property research firm Real Estate Econometrics. The
projection expects defaults on about $44.3 billion of commercial
mortgages, based on the $1.08 trillion of loans held by U.S. banks in
the first quarter. Commercial defaults are already at a 15-year high
after climbing to 2.3 percent in the first quarter.