Hat tip to the great blog ‘The Big Picture‘.

Remember what the ’sub-prime’ catastrophe did to the economy?

Get ready for market panic 2.0

Remember Sub-Prime?

Interesting piece from Deutsche Bank on rapidly deteriorating Construction loans. DB predicts that “construction loans will be the epicenter of bank loan problems”

• By far the riskiest type of loan product in bank portfolios;
• Substantial portion represents loans to homebuilders;
• Market currently penalizing properties with vacancy issues extremely severely;
• Newly constructed (or only partially constructed) properties are the poster children for vacancy problems in CRE;
• Values of most newly constructed properties are down massively;
• Expect extremely high default rates and extremely high loss severity rates, both likely to be in excess of 50%;
• Total expected losses of 25% or more.

Commercial Loan Delinquency

This entry was posted on Friday, August 7th, 2009 at 12:43 pm and is filed under Charts, Collapse of the Dollar. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.