Rising delinquency rates
It’s no secret that obtaining loans for commercial real estate has been overly difficult and complex in recent years, and one of the many reasons is that delinquencies have been on the rise.
According to Morgan Stanley, delinquencies on commercial loans packaged and sold off as bonds has exceeded the 10% mark for the first time despite a slowing pace in the rising delinquency rate.
The rate at which borrowers are missing payments for the first time has remained stagnant for the past four months.
Wells Fargo alone has $130 million in outstanding commercial real estate loans, adding up to 17% of their total loan portfolio. Any bank with outstanding loans this extensive cares that the average outstanding balance on all American CRE loans is on the rise along with new delinquencies.
A commercial recovery isn’t expected in 2011 or even 2012 and lending will remain tight, analysts believe.