"It's pretty bleak," Foresight principal Matthew Anderson tells GlobeSt.com. "You can see why the Fed and banking regulators are … moving into relatively high alert mode. Regulators are staffing up for increased levels of workouts. The FDIC has a list of 76 problem institutions currently, and that's always a bit of a lagging indicator, actually. If you were able to look through to underlying value of some of the mortgage portfolios out there, they wouldn't look too good."
The delinquency rate for non-residential commercial construction loans hit 2.2% (of $270 billion) in the fourth quarter, up from 1.7% (of $226.7 billion) in the third quarter and 1.3% (of $214.1 billion) in the second quarter. In the fourth quarter of 2006, the delinquency rate for non-residential commercial construction loans was 1.0% (of $145.0 billion). Delinquency rates have not been higher since 2002.
The delinquency rate for condominium construction loans spiked in the fourth quarter, rising to 10.1% (of $42.3 billion) from 6.0% (of $42.4 billion) in the third quarter and 4.2% (of $40.4 billion) in the second quarter. At the end of 2006, the condo construction loan default rate was 2.6% (of $44.9 billion), according to the report.
Apartment construction loan delinquency was the least affected, increasing to 1.5% (of $46.4 billion) in the fourth quarter from 1.2% (of $46.5 billion) in the third quarter and 0.9% (of $43.8 billion) in the second quarter. At the end of 2006, the apartment construction loan default rate was 0.7% (of $46.4 billion), according to the report.
The delinquency rate for single-family construction loans hit 7.5% (of $270.2 billion) during the fourth quarter, up from 4.3% (of $300.8 billion) in the third quarter and 3.1% (of $302.0 billion) in the second quarter. In the fourth quarter, the delinquency rate for single-family construction loans was 2.1% (of $328.6 billion).
"Lenders are getting even more cautious about lending, even non-residential commercial lending," Anderson tells GlobeSt.com. "So our outlook is for generally slower growth or even a pull back in the volume of construction lending out there over 2008, certainly on residential side but also on commercial side."
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