Commercial loan defaults could have prompted less construction

The delinquency rate of loans backing commercial mortgage bonds rose significantly in March on a month-over-month basis.

The delinquency rate of loans backing commercial mortgage bonds rose significantly in March on a month-over-month basis.

The delinquency rate of these loans surged 31 basis points during the month to 9.68 percent, according to a recent report from Trepp. This is the largest monthly increase recorded since July 2011 when the rate spiked 51 basis points. Previously, the rate hovered at 9.37 percent in February, and was recorded at 9.42 percent a year earlier.

Mortgage records indicate that nearly $5 billion worth of commercial mortgage bonds became delinquent during the month, with the largest reported in multifamily properties. The delinquency rate in this sector rose 74 basis points from the previous month to 15.39 percent in March.

Meanwhile, delinquencies in the office sector rose to 9.41 percent, while retail delinquencies increased 24 basis points to 8.24 percent.

As a result of unstable commercial lending activity, the Department of Commerce recently found that construction spending fell 1.1 percent in February to an annual rate of $808.9 billion.



blog comments powered by Disqus