RCA in the commercial property press:

Dr Chandan's Lead Indicator: "The Rise and Fall of Default"

Commercial Observer reports: Using quarterly bank filing data sourced from the FDIC, Real Capital Analytics global chief economic Dr Sam Chandan provided a detailed analysis of third quarter default rates on commercial and multifamily mortgages in his latest Commercial Observer column.

According to the data, the default rate for commercial mortgages currently outstanding at the nation’s depository institutions – including mortgages at least 90 days delinquent and mortgages in non-accrual status – increased to 4.36 percent in the third quarter. However, the third quarter’s rise was the second-smallest quarterly increase in three years, providing reason to believe that the national default rate may be reaching its cyclical peak. Dr Chandan explained that, “As property prices and rent measures stabilize in many markets, the increase in strain on bank health related to commercial real estate is also becoming more measured.”

For more detail on commercial and multifamily default rates, as well as some reasons for caution, disaggregated trends by bank institution size, implications of defaults on credit availability, and legacy issues surrounding currently defaulted and delinquent mortgages, please see Dr Chandan’s article in full on the Commercial Observer’s site.

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Posted by: Nina Turner

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