Figure 34. Delinquency and charge-off rates for residential real estate loans at commercial banks, by type of loan, 1991-2008.
Data are plotted as curves. There are two panels. In the top panel, the delinquency rate on total residential real estate loans begins in 1991 at about 3.2 percent, falls steadily to about 2 percent in 1995, and remains near that level until 2001. The rate declines continuously to around 1.4 percent in early 2005, rises some through 2006, and then jumps to about 3 percent by the end of 2007 and to above 6 percent by the end of 2008. The delinquency rate on revolving home equity loans starts in 1991 just below 2 percent, moves down fairly consistently (interrupted only by slight increases in 1995-96 and 2000-01) to about 0.5 percent in 2004, and then rises steadily to about 1.7 percent by the end of 2007 and to 3.2 percent at the end of 2008. The delinquency rate on other residential real estate loans begins in 1991 at about 3.5 percent, falls on balance to about 2.1 percent in 1995, and remains near that level until 2001, when it rises on balance to about 2.5 percent by the end of the year. It declines over the next several years to around 1.8 percent in early 2005, rises some through 2006, and then begins to rise rapidly in 2007 and throughout 2008. It ends the year at about 7.5 percent. In the bottom panel, the net charge-off rate for total residential real estate loans begins in 1991 at just more than 0.2 percent, falls on balance to about 0.09 percent in 1998, and rises in mid-2001 to a bit less than 0.2 percent. The rate spikes to 0.43 percent in the third quarter but reverses most of that increase in the fourth quarter. The rate declines, on balance, through 2003 to about 0.12 percent before spiking again in late 2003 to 0.33 percent. The spike is reversed in early 2004, and the rate falls in 2005 to about 0.06 percent, but then begins to climb in 2006, reaching almost 0.5 percent at the end of 2007 and nearly 1.6 percent by year-end 2008. The net charge-off rate for revolving home equity loans starts in 1991 at about 0.15 percent, rises on balance to about 0.20 percent in mid-2003, and spikes to 0.45 percent in late 1993. The rate drops to about 0.3 percent in early 1994 and ends that year around 0.2 percent. It moves a little higher, on balance, through mid-1996 before declining to about 0.15 percent in 1997, a level around which the rate fluctuates through mid-2000. The rate moves up to about 0.35 percent in late 2001, falls to about 0.08 percent in late 2004, and then rises over 2005 and 2006 to more than 0.2 percent before surging to almost 0.7 percent in the fourth quarter of 2007 and to nearly 2 percent by the fourth quarter of 2008. The net charge-off rate for other residential real estate loans begins in 1991 at about 0.2 percent, rises in 1992 to about 0.3 percent, falls on balance to about 0.08 percent in 1998, rises in 2001 to about 0.15, and then spikes in the fourth quarter of 2001 to 0.57 percent. The spike mostly reverses early in 2002, and the rate falls in 2003 to about 0.11 percent. It rises in late 2003 to about 0.35 percent but falls by 2005 to about 0.04 percent; it edges higher in 2006 and climbs in 2007 to about 0.37 percent and in 2008 to about 1.5 percent.
NOTE: The data are quarterly and seasonally adjusted. 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.
