Figure 31. Delinquency and charge-off rates for construction and land development loans, by type of loan, 2007-08.
Data are plotted as bars. There are two panels. In the top panel, delinquencies on residential construction and land development loans begin in the first quarter of 2007 at about 2.7 percent. They rise steadily to about 7.4 percent in the fourth quarter of 2007, surpass 12 percent by the end of the second quarter in 2008, and end 2008 at almost 18 percent. Delinquencies on other types of construction and land development loans begin in the first quarter of 2007 at about 1.7 percent, and rise steadily, to nearly 10 percent in the fourth quarter of 2008. In the bottom panel, residential net charge-offs start at about 0.1 percent in the first quarter of 2007, rise to about 1.2 percent in the fourth quarter of 2007, to 2 percent in the first quarter of 2008, to 4 percent in the second quarter of 2008, and end the year just more than 7 percent. Other net charge-offs rise from about 0.05 percent in the first quarter, to about 0.75 percent in the fourth quarter of 2007 and first quarter of 2008. The curve moves up to nearly 2 percent in the second quarter of 2008, and ends the year at about 4.75 percent.
NOTE: Delinquent loans are loans that are not accruing interest and those that are accruing interest but are more than 30 days past due. The delinquency rate is the end-of-period level of delinquent loans divided by the end-of-period level of outstanding loans. The net charge-off rate is the annualized amount of charge-offs over the period, net of recoveries, divided by the average level of outstanding loans over the period. For the computation of these rates, commercial real estate loans exclude loans not secured by real estate. Commercial real estate loans are measured as the sum of construction and land development loans secured by real estate; real estate loans secured by nonfarm nonresidential properties or by multifamily residential properties; and loans to finance commercial real estate, construction, and land development activities not secured by real estate.
