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OAKLAND, CA-The loan default rate for commercial real estate nationally jumped a full percentage point in the fourth quarter of last year, its most rapid quarterly rise since it began trending upward in 2006, according to Foresight Analytics. Final fourth quarter figures are not due until the end of the month; the company bases its estimate on earnings reports and call report filings from several larger banks and many smaller banks.

The total delinquency rate for commercial mortgages rose to 2.6% in the fourth quarter of 2008, up 50 basis points from 2.1% at the end of September and 100 basis points since the end of 2007, according to the report. Foresight Analytics partner Matthew Anderson tells Globest.com that additional data received since the report was drafted supports the estimate. Its estimates for the second and third quarters were overstated by 0.2% and 0.3%, respectively.

“[The rate] is still well below the 7.5% delinquency rate at year-end 1991 (estimated) but it is worrisome in light of a rapidly eroding economy, severely constrained credit availability and our estimate of $160 billion in commercial mortgages coming due during 2009,” Anderson says. “Current conditions don’t bode well; there appears to be a bit of room for the rate to grow this year. We’re sure what 2010 is going to look like but we’re trying to gear up for more of the same.”

The weak housing market is hitting the construction sector especially hard, according to the report. The national delinquency rate for commercial construction loans (which for banks includes residential construction) began the fourth quarter at 9.6% and ended it at 11.2%, up 160 basis points, a jump similar to the same year-earlier period, Anderson says. Nonaccruals–past due loans on which the lender has stopped accruing interest because repayment is doubtful– are driving the increase, rising to an estimated 8.2% in the fourth quarter from 6.9% at the end of September and 2.9% at year-end 2007. The 11.2% delinquency rate is higher than it was at year-end 1993 but still lower than the 16.1% posted in 1992.

“While single family construction loans are by far the main source of problems, results for many smaller banks indicate rising delinquency rates for other construction sectors, including commercial real estate construction,” Anderson says. “To some extent we think figures might somewhat understate the true condition out there.”The national delinquency rate on first-lien, single family residential mortgages increased by 40 basis points during the fourth quarter, to 6.8%, according to the report. The rate was 4.2% at the end of 2007.

Nonaccrual rates for those same mortgages rose by 30 basis points to 3.2% during the third quarter—”the highest nonaccrual rate since at least 1992, the beginning point for our data,” Anderson says. The good news is that the rate of increase during the third and fourth quarters was the lowest since mid 2007.

“The rate of increase appears to have slowed, possibly indicating that delinquencies are nearing a peak,” he concludes. “The 30 basis point increase in the rate during the past two quarters was the lowest since the second quarter of 2007.”

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