The commercial mortgage default rate on loans held by U.S. banks more than doubled to 3.4% in the third quarter as vacancies rose and rents declined, Real Estate Econometrics LLC said.
Defaults climbed from 1.37% a year earlier and from 2.88% in the second quarter, the property research firm in New York said Tuesday in a report. Default rates in the first three quarters of 2009 have been the highest since 1993, the firm said.
"Mortgages originated in 2006 and 2007 are experiencing the most significant shortfalls in current cash flow relative to current debt-service obligations," Sam Chandan, chief economist of the firm, said in the report.
Third-quarter defaults on bank-owned commercial property mortgages posted the biggest quarterly jump from the previous three-month period in six years of FDIC data analyzed by Real Estate Econometrics, the company said.
Lenders working with property owners may be able to keep the default rate to 4% for the fourth quarter, Chandan said. The firm pared back its forecast for 2010 to 5.2% from 5.3%.
