Photo: Associated Press
Apartment building loans are experiencing soaring default rates, in what could be a signal of things to come for the broader commercial real estate sector.The default rate for apartment building mortgages held by banks soared to 4.6% in Q1, which is nearly twice what it was in Q1 of 2009.
Defaults on so-called multifamily mortgages rose from 4.4 per cent in the fourth quarter and from 2.4 per cent during the same period in 2009, the New York-based real estate research firm said today. Commercial-mortgage defaults also rose in the first quarter for loans against office, retail, hotel and industrial properties, Real Capital said.
“Apartment defaults are leading other commercial real estate,” Sam Chandan, global chief economist at Real Capital, said in an interview. “Banks tended to make more aggressively underwritten apartment loans earlier during this last cycle. Credit and pricing reached their peaks for office properties and other commercial assets later.”
Here it comes.
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