Delinquency rates for all construction and land loans rose to14.5% during the first quarter, up sharply from 11.4% during thefourth quarter of 2008 and nearly triple the 5% rate in the fourthquarter of 2007, according to the report.

"Starts dropped off during 2008 and so that is now having animpact on the volume of construction loans outstanding," Foresightprincipal Matt Anderson tells "So in one sense it isnot unexpected but on the other hand it does reflect reducedliquidity and reduced volume flowing into market."

In terms of delinquency rates, Anderson expect them to keeprising in 2009 for all major property types. "[The delinquency ratefor] for-sale residential is at historic highs but, given currentstate of market, we don't see any reason to believe that thoserates will turn around in the immediate future," he says. "Lookingat commercial real estate, the halt in new construction and thedeterioration of market fundamentals are probably going to drivethose delinquency rates up as well."

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