Although many had hoped that the commercial mortgage market would be able to weather the housing crisis, it is now apparent that delinquencies and defaults are on the rise. Many are blaming the economic crunch, rising costs of living as well as bad lending practices for the fall in the commercial mortgage market. Although it was generally perceived as being safe, banks are now finding that they are in just as much problem in this sector as they are in other markets. Experts fear that the trend in the commercial mortgage market is only going to continue. However, there may be a silver lining in the cloud, since those with a commercial mortgage usually do have some protection from complete defaults and the sheer number of these mortgages is not as high as the traditional mortgage market.”The commercial real estate markets are not facing the same significant oversupply that plagued the markets in the late eighties and early nineties, plus tax treatment of commercial real estate projects has been relatively steady,” Fitch Managing Director Bob Vrchota said in a statement.”We are saying stop. We’ve got 40 basis points of delinquencies. We’ve got in-balance markets. We’ve got sophisticated borrowers. We are not the same business,” said Lee Cotton of Fitch Ratings.
Related reading: Commercial Mortgages
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