The U.S. delinquency rate for commercial property loans by banks also is low: just 1.2 percent in the third quarter, up from 0.8 percent a year earlier, according to Trepp.
Banks may weather the current downtown better than the last one because they have limited exposure to two of the hardest-hit commercial property sectors: hotels and retail, Anderson said. And they’re in better shape today, having resisted the temptation to load up on marginal real estate debt like they did during the last cycle, he said.
“There weren’t really broad excesses anywhere, in contrast to the Great Recession,” he said. “Real estate was obviously overheated” back then.
Anderson expects the local delinquency rate to rise to 2 to 3 percent in the fourth quarter. The length of the recession will determine where it goes from there.
“If that continues for a long time, you could see the delinquency rate rising