3Q11 Sees CRE Debt Decreasing $22B

The drop over 3Q11 of commercial and multifamily loans is a credit positive for CMBS, according to Standard Poor’s in a note released Friday.

The outstanding balance of commercial and multifamily mortgages dipped $22 billion to $3.09 trillion in the third quarter, SP said, citing the Federal Reserve flow-of-funds data.

This, analysts said, is “a positive for the credit of currently originated loans in CMBS in our view.”

Historically, they stated, there is a strong and positive correlation between loan losses and the CRE debt to GDP ratio, which is a variable in SP’s CMBS Leading Indicators (CLI) Index.

The ratio between CRE debt/GDP dipped 0.4% to 20.3% over the quarter. It has also decreased from the peak of almost 25% in 2008.

The rating agency said that since year-end 2010, life insurance firms have added slightly to exposure. Meanwhile, banks and CMBS have declined.

Daily Briefing | Friday, December 9, 2011

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Article source: http://www.nationalmortgagenews.com/dailybriefing/2010_494/3q11-cre-debt-decreasing-1027831-1.html

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