The Las Vegas Business Press has an update on that housing bubble. "As the home-loan delinquencies rise nationwide, Nevada's numbers remain surprisingly strong. However, the pending interest-rate hikes by the Fed, the day-to-day fluctuations in oil prices, and the Silver State's high percentage of interest-only and adjustable-rate mortgages have left some lenders and analysts wondering if the bubble will burst.'"

"'Where you will probably have problems is with the no-down-payment, 100-percent-financed ARM (type of loans), and interest rates go up,' Nevada State Bank Senior Vice President Jeff Bargerhuff said. 'It's kind of like the perfect storm of mortgage lending.'"

"Nevada ranks second in the nation at 61.3 percent, behind only California (69 percent; in 2004, it was 46 percent), in the percentage of potentially negative-amortizing mortgages, including interest-only and products with ARM options, according to the FDIC. Nationwide, 49.5 percent fall into that category. 'ARMs tend to have a higher rate of foreclosure,' said an official from the MBA."

"The year-end 2005 FDIC statistics show a sharp jump from the same time 12 months before, when Nevada's interest-only and adjustable-option loans were more in line with the rest of the country. The state had 39.5 percent of its mortgages in that category at the end of 2004, compared with 31.1 nationwide."

"Problems can show up when underwriting standards are relaxed, Nevada State Bank President Bill Martin added, 'It just depends how tight the lender tied it and if they just didn't care because they wanted the loan. You have to realize people have car payments and other things to pay.'"

"Some of the riskiest of loans, the subprime ARM loans, showed an increase in delinquencies at the end of 2005. The Mortgage Bankers reported 7 percent of such loans were 30 days or more past due in Nevada, compared with 5.2 percent the year before. The U.S. averaged a 12.6 percent delinquency rate in subprime ARM mortgages as of December 2005, which was up from 10.7 percent the year before. 'It's what we have been expecting,' a MBA representative said. 'There are so many new loans out there that haven't been seasoned. Interest rates may play a role in the future, but right now, it is just the economy, job loss and low (home) appreciation.'"

"One realty broker, Linda Rheinberger believes there might be too much emphasis put on Nevada's interest-only loan numbers anyway. 'It's just to maximize return,' she said of the financing's popularity among investment buyers. 'If you don't hold the properties that long, it doesn't make sense to put money down.'"