Bank loss rates on CRE loans up in fourth quarter
BPC Staff May 4, 2016 | 9:47 pm
<1 min read time
0 wordsAll Latest News, Banking and Finance, Real Estate and DevelopmentLoss rates on banks’ commercial real estate loans rose in the final quarter of 2015 after being at multiyear lows the rest of the year, according to data from Sageworks, a financial information company, Forbes reported. First-quarter data is expected in the next several days, but the fourth-quarter increase in CRE loss rates (annualized net charge-offs as a percentage of average loan balance) occurred as regulators warned they are beginning to pay special attention to institutions’ activity tied to commercial real estate lending. Rob Ashbaugh of Sageworks said it’s unclear what exactly led to the higher loss rate during the fourth quarter. However, he noted that loss rates have ticked higher in the fourth quarter during six out of the last eight years, and they remain well below rates generally seen since 2008. Meanwhile, Trepp LLC reported that the delinquency rate for commercial mortgage-backed securities inched up in April for the second straight month after large decreases in January and February. The rate in April was 4.23 percent, an increase of 1 basis point from March. The rate is 134 basis points lower than the year-ago level and 94 basis points lower since the beginning of the year.