CRE delinquencies creep upward, signaling tighter lending and rising refinancing risks
About the CRE Delinquency RateDelinquency rates on commercial real estate loans have edged higher over the past year, rising from 0.95% in Q3 of 2023 to 1.05% in Q3 of 2024. While this increase remains relatively modest, it marks a continuation of the gradual upward trend seen in recent quarters, reflecting the pressures of elevated interest rates, shifting demand in key property sectors, and broader economic uncertainty. Although delinquency levels are still well below historical peaks, the persistence of even slight increases suggests growing financial stress for some property owners and lenders.
For the commercial real estate industry, this trend signals a period of cautious adjustment. The relatively stable but slightly rising delinquency rate suggests that lenders are closely monitoring risk exposure, particularly in asset classes facing structural challenges, such as office and certain retail properties. As borrowing costs remain high, distressed properties and refinancing difficulties could become more common, leading to selective tightening of credit standards...
RSK: Still creeping up but I bet it is not the well maintained and managed properties that are hurting.
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- - Volume: 25 - WEEK: 7 Date: 2/11/2025 2:27:03 PM -