As the economy improves, the delinquency rates for Chicago-area commercial mortgages, together with construction and land loan delinquencies have jumped again in the second quarter and could rise well into 2010. This may suggest that local banks won’t start making commercial real estate loans any time soon.
Delinquency rate on local commercial mortgages climbed to 6.1%
During the second quarter, the delinquency rate on local commercial mortgages has climbed to 6.1%. According to Foresight Analytics LLC, an Oakland, Calif.-based research firm, the rate has risen sharply from 5.6% in the first quarter and nearly double the year-ago quarter, when the rate was 3.6%.
Chicago now has the third-highest rate among the biggest 100 metropolitan
Nationwide, the rate now stands at 4.3%, and Foresight predicts it could climb above 6% next year. This makes Chicago as the third-highest, among the biggest 100 metropolitan areas, eclipsed only by Jacksonville, Fla., and Miami.
The delinquency rate in the Chicago area is now a staggering 21.2%
The delinquency rate in the Chicago area is now a staggering 21.2%, for construction and land loans, which includes lending for condominium projects. That’s up from 18.2% in the first quarter and 10.8% in the second quarter last year. Chicago’s construction and land loan delinquency rate ranks 12th-highest among the top 100 metros; the nationwide rate is 17%.
Delinquent loans are defined as those loans that are 30 days or more past due date, by Foresight, which compiles its data from regulatory filings. The firm calculates a rate by dividing the dollar amount of the delinquent loans by the value of all outstanding loans.
Banks are holding more than $34 billion worth of repossessed real estate
The Federal Deposit Insurance Corp. announced earlier that 416 banks were on its “problem list,” meaning they’re at risk of insolvency. The list was at 305 banks at the end of the first quarter and just 117 at the end of the second quarter last year.
According to a Wall Street Journal analysis of FDIC data, banks are holding more than $34 billion worth of repossessed real estate. The banks’ pools of foreclosed properties climbed 12% from the prior three months and are up 72% from a year ago.