Monday, May 24, 2010
US Default levels hit peak
Bloomberg: Defaults on Apartment-Building Loans Set Record for U.S. Banks
"Defaults on apartment-building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter, almost twice the year-earlier level, as more borrowers failed to repay debt approved near the market peak, said Real Capital Analytics Inc. in a report". "The global recession cut demand for U.S. apartments, office space, retail shops, hotels and warehouses during the past two years as jobs disappeared and consumers cut spending. Defaults on apartment-building mortgages surpassed the previous record, set in 1993, for the past three consecutive quarters".
Posted by alan @ 08:06 AM (412 views) Add Comment
2 Comments
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1. Stillthinking said...
Debt servicing costs are cost of funds+cost of administration+*cost of defaults*.
So apartment-building mortgages need to be at least 4.6%, but they aren't, so the US banks are either cross-subsidizing from other more profitable areas, passing the losses to the taxpayer, or taking the losses out of their capital.
As they seem to eb passing the losses to the taxpayer it is surprising that more fuss isn't made.
2. stillthinking said...
Debt servicing costs are cost of funds+cost of administration+*cost of defaults*.
So apartment-building mortgages need to be at least 4.6%, but they aren't, so the US banks are either cross-subsidizing from other more profitable areas, passing the losses to the taxpayer, or taking the losses out of their capital.
As they seem to eb passing the losses to the taxpayer it is surprising that more fuss isn't made.