Puerto Rico has another debt problem — beyond the $70 billion the island owes bondholders. Even as other parts of the U.S. have bounced back from the recession, the commonwealth is still recording “stubbornly high” mortgage delinquency rates and anemic rates of household borrowing, according to a blog post this month by the New York Fed, the Wall Street Journal reported yesterday. In 2010, 8 percent of Puerto Rico mortgages were 90 or more days past due — about the same percentage as in the U.S. as a whole, the Fed analysts wrote. But while U.S. mortgage delinquency rates have fallen back to 2 percent, Puerto Rico’s remain stubbornly at 7 percent. About 20 percent of Puerto Rico mortgages are subprime, compared to 8 percent for the U.S. as a whole. Puerto Rico’s commercial banks have also pulled back both their commercial and consumer lending, or at least what they’re holding on their books, according to analysts’ review of Puerto Rico banking sector data. The outstanding balances on commercial loans held by Puerto Rico’s commercial banks has shrunk to about $15 billion from about $35 billion in 2006, the analysts found. Four commercial banks have failed and subsequently been acquired since the beginning of 2010. Read more. (Subscription required.)
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
