Danger to banks from commercial mortgages still climbing
08/12/2009 8:30 am EST
The loans that Fitch follows in this sector represent $480 billion, or about two-thirds of the CMBS market.
Deliquencies haven't stopped rising either. Fitch projects that they will hit 5% by the end of the year.
The danger is that these delinquencies will set off another round of balance sheet explosions as banks, insurance companies, pension funds,and other investors have to write down the value of CMBS they hold on their books. A rising tide of delinquencies among commercial mortgages themselves would hit small and regional banks hardest since they have the biggest exposure, in relation to the size of their portfolios, to the commercial morgage market.