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Banks’ CRE Delinquencies Show Modest Improvement from Recent Peak
Within the banking universe, overall commercial real estate delinquency rates are declining after a modest rise in 2020, Trepp’s Matt Anderson reports. However, he notes that individual property sectors – notably, lodging and retail – are experiencing much higher delinquency rates as a result of the intense recession during 2020.
“Furthermore, banks’ risk ratings indicate regional and property type concerns that are not uniform,” writes Anderson. “The 2020 recession is also being felt in the lower volume of new commercial mortgage originations.”
Delinquencies on commercial mortgages from banks hit a recent peak of 1.3% in the fourth quarter of 2020, according to Anderson. Since year-end 2020, the economic recovery has helped bring mortgage delinquency rates down, with modest improvements in both Q1 and Q2 2021.
As of Q2 2021, banks’ overall CRE delinquency rate stood at 1.1%, while the noncurrent (more serious delinquencies) rate stood at 0.9%, both still above pre-pandemic levels.
- ◦Financing
