CRE Investors Should Take Note Of Recent Commercial Mortgage Delinquency Rates

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CRE Investors Should Take Note Of Recent Commercial Mortgage Delinquency Rates

fix flip hard money lender level 4 funding llcCommercial mortgage delinquencies aren’t skyrocketing, but the numbers aren’t optimistic. You’ll want to understand where the market is headed before your company makes a major property investment.

The reality is that delinquency rates are up for commercial mortgages. A wide range of experts are have offered explanations for this trend, though a vast majority have promised that this is just an instance of the post-recession market correcting itself over time. This cyclical behavior should be expected. Regardless of why delinquencies continue to rise, companies taking out commercial loans are smart to understand the market they are entering.

This recap of the summer illustrates how commercial mortgage delinquencies have risen and fallen since the beginning of the summer. With 2018 right around the corner, it pays to analyze trends like these for patterns that can be used to prepare for the future. Likewise, failures to account for these trends could mean missed opportunities or wasted revenue for your business.

● Delinquencies Increased In June – In June, commercial real estate delinquencies experienced a disturbingly large jump. According to Fox Business, 5.75% delinquency rate measured in June of 2017 marked the largest month-over-month increase since 2012. It is also a notable increase over last year’s delinquency rate in June, recorded at 4.6%.

Much of this increase was attributed to a “wall of maturities,” a large volume of loans signed in 2007 and set to be paid this year. While jump in delinquencies not ideal, the impact of these is far less dire than was predicted a year ago. That’s because much of the properties that made up the feared “wall of maturities” were sold or foreclosed on before their mortgages reached delinquency.

● Delinquencies Decline In July – Scotsman Guide reported that delinquency rates did not see major further gains during the month of July. Instead, they decreased to 5.49%, about the rate measured in May, prior to the major jump during June. Despite the positive shift, Trepp, the bank that collected the July data, emphasized that 13 of the past 17 months through July have seen the delinquency rate worsen.

● August Shows More Signs Of Relief – Delinquency rates fell further to 5.44% in July, according to National Mortgage Professional. This is considerably higher than 2016, when delinquencies sat at 4.68%. A further testament to the enduring demand for multifamily property is the fact that delinquencies in this sector remained relatively unchanged throughout the summer. In that way, multifamily is very much buoying the rest of the industry. Other industries saw a mixed bag of results.

Making Smart Investments Helps Companies Avoid Dealing With Delinquent Rents

The biggest takeaway from this summer’s delinquency rate trends is how well some sectors of the industry are performing while others lag behind. Be sure to take these trends to heart as your company decides on what type of properties to finance with a commercial mortgage.

Work with a qualified private lender in your area to identify the best locations and industries for low-risk redevelopment.

Need a commercial mortgage to help your company take advantage of the strong multifamily market? An experienced private lender can help you the capital you need as quickly as possible.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
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About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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