Interest Rate Roundup

Thursday, February 14, 2008

Fitch: Auto delinquencies hit 10-year highs; Plus, an update on commercial real estate

Lots of news flying around. One such update from Fitch Ratings just hit on the performance of prime and subprime auto loan Asset Backed Securities (ABS). The firm says its 60 day+ delinquency index for prime auto loans in ABS securitizations climbed to 0.77% in January. That's up 44% from a year ago and the highest in 10 years. The subprime auto loan delinquency rate hit 4.03%, up 43% from a year ago and the highest since late 1997.

One other item that caught my attention: Reed Construction Data said the value of non-residential construction starts fell 13.1% year-over-year in January. Commercial starts fell 26.2% and industrial starts dropped 56.8%, with office starts running at the lowest level in almost two years. Only military facilities, parking garages, and hotels saw increases.

It'll be interesting to see when the government's non-residential construction data starts to roll over. Nonresidential construction spending has increased every month since September 2006, but the December rise was miniscule (+0.04%). And the Wall Street Journal recently noted that signs of weakness are emerging. Certainly, the degree of tightening in commercial real estate financing points to a tougher funding environment for commercial developers.


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