Residential Delinquencies Soar in Q109
The seasonally-adjusted delinquency rate among residential mortgages reaches a record high in Q109, soaring to 7.9% from 6.3% in the previous quarter, according to statistics calculated by the US Federal Reserve. It marks the 12th quarterly increase since Q106, when the rate sat at 1.6%, as well as the highest rate in the Fed's records starting in 1985. The staggering rates led to charge-off-related losses at the banks studied and indicate the residential mortgage industry may continue to unwind for quarters to come. The performance of commercial real estate also deteriorated, climbing to a 6.4% charge-off and delinquency rate in the quarter, from 5.4% in the previous quarter. The year-ago quarter illustrates the depth of the performance plunge in a few months. The Fed found residential mortgages experienced a 3.7% charge-off and delinquency rate, while commercial real estate loans posted a 3.4% rate among all commercial banks in Q108. The rates have nearly doubled in the past 12 months. Among the 100 largest commercial banks in terms of domestic assets, the figures are even bleaker for the current quarter: 8.8% of residential and 6.39% of commercial real estate loans are in the charge-off and delinquency stages among the largest banks in Q109. The Fed gathers data, including charge-off and delinquency figures, from all commercial banks for quarterly release. Charge-offs are the value of loans removed from banks' books and charged against reserves, while delinquent loans are more than 30 days past due and either accruing interest or considered in nonaccrual status, according to the Fed's release. Write to Diana Golobay.