In the third quarter of 2023, Trepp reported a significant decline in commercial mortgage origination volumes for bank-held loans. This trend is reflected in increased stress within the commercial real estate (CRE) lending market, as seen through net charge-offs, delinquency rates and occupancy rates.
Across all property sectors, new CRE loan originations decreased by $2.2 billion to $2.5 billion in Q3 2023 from $4.7 billion in Q2 according to Trepp’s findings. The multifamily and lodging sectors experienced the largest decreases in origination volume compared to previous quarters.
Trepp research analyst Emily Yue notes that mortgage underwriting terms for new originations during this period were weaker than those made earlier on.
While there have been some positive signs of recovery for lodging and retail sectors with regards to delinquencies over recent quarters, office sector rates continue to rise steadily. Overall delinquency rate also saw a sharp increase from 1.2% at the end of previous quarter up to 1.% as Q3 came to an end.
