Search
 

Delinquency Rates Spike for Construction Loans

OAKLAND, CA- The delinquency rate for all construction loans nationally rose to 5.0% during the fourth quarter, more than double the 2.4% rate at mid-year, according to a new report.

By Brian K. Miller | Updated on February 28, 2008

OAKLAND, CA-The overall delinquency rate for commercial construction loans nationally jumped to 5.0% (of $628.9 billion) during the fourth quarter from 3.2% (of $616.4 billion) at the end of the third quarter and 2.4% (of $600.3 billion) at mid-year, according to Foresight Analytics, a locally based firm that provides real estate market analysis and forecasting for institutions, lenders and developers. The increase continues a trend that began in mid-2006 and has not let up. Delinquency rates for every type of construction loan — single family, apartment, condominium and non-residential commercial – have risen in each of the past six quarters, according to the report.

“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.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.