Why housebuilders are demanding state hand-outs… More hilarity in the housing industry this weekend. Builders are now demanding state help. As housing sales have collapsed, the construction industry faces mass redundancies, while house builders themselves have seen their share prices dive.
They’ve already taken a hit on subprime, now major US banks, including troubled Wachovia, could be facing a similar crunch in the construction-lending market.
Part of Wachovia’s problem — apart from its residential-mortgage woes — is the $23.9 billion in outstanding debt it holds in relation to commercial-property projects at the end of the first quarter, according to The Wall Street Journal.
“Teaser rates of just 1% interest, left almost one-in-ten subprime borrowers unable to meet their monthly mortgage bills,” says Adrian Ash in The Daily Reckoning UK.