The commercial mortgage default rate on loans held by U.S. banks more than doubled to 3.4 percent in the third quarter as vacancies rose and rents declined, Real Estate Econometrics LLC said.

Defaults climbed from 1.37 percent a year earlier and from 2.88 percent in the second quarter, the New York-based property research firm said today in a report. Default rates in the first three quarters of 2009 have been the highest since 1993, the firm said.

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An index compiled by Moody's Investors Service found that prices of commercial real estate have, on average, returned to levels seen seven years ago. The Moody's/REAL Commercial Property Price Index declined 3.9% in September to 109.61 from 114.06 in August. Based on the index, prices for commercial real estate were 37% lower than in September 2008 and 42.9% below the peak measured in October 2007. The index is based on repeat sales of the same properties across the U.S. at different times.

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