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Delinquency Rates on Commercial Mortgages Increase -- Apartments Lead the Pack
In the U.S. market, commercial real estate is being hit hard. According to the Mortgage Bankers Association, there is approximately $3.1 trillion in commercial debt outstanding and delinquency rates among these properties are escalating at alarming rates. The securitized market represents about $724 billion and there is concern that the increasing unemployment rate will hurt more property owners and thus cause more defaulting mortgages. Delinquent loans, considered 60 or more days in arrears, have substantially increased in two years. The delinquency rate now stands at 2.67% for the entire commercial sector. A year ago the rate stood at .46%, a startling 480% increase in one year. According to Moody's, in July 2007 the delinquency rate was a mere .22%. 
As a comparison the housing market's mortgage delinquency rate stood at 7.8% at the end of the 4th quarter of 2008. One might conclude that the commercial market is healthy, but what is concerning is the rate of increases quarter by quarter in delinquencies. Many experts are predicting the delinquency rate to make a steep climb to 5-7% by year end.  Couple these steep increases with $814 billion in mounting debt maturing over the next 3 years and U.S. commercial real estate ... more

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