From Bloomberg:
U.S. Subprime Mortgage Delinquencies at 4-Year High
Subprime borrowers fell behind on their mortgages at the highest rate in four years in the fourth quarter and delinquencies rose on all types of U.S. home loans, the Mortgage Bankers Association said.
U.S. mortgages entering foreclosure rose to an all-time high of 0.54 percent, the Washington-based bankers’ group said in a report today. Subprime delinquencies rose to 13.33 percent from 12.56 percent in the third quarter. Overdue payments on all types of loans rose to 4.95 percent from 4.67 percent in 2006’s third quarter. That was the highest since the second quarter of 2003.
“Although the U.S. economy and the job market remain solid, the housing market continued to decelerate in the fourth quarter,” Doug Duncan, the association’s chief economist, said in a statement.
The delinquency rates are an early indicator of mortgage defaults, which would contribute to declines in a housing market already beset by falling prices and too much inventory. The data comes after New Century Financial Corp. said it is the subject of a U.S. Securities and Exchange Commission investigation, leading to a suspension of trading. The second-biggest U.S. subprime mortgage lender yesterday said it doesn’t have the cash to pay creditors, including Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc.
From the AP:
Late Mortgage Payments Reach High
Late mortgage payments shot up to a 3 1/2-year high in the final quarter of last year and new foreclosures surged to a record high as borrowers with tarnished credit histories had trouble keeping up with their monthly payments.
The Mortgage Bankers Association, in its quarterly snapshot of the mortgage market released Tuesday, reported that the percentage of payments that were 30 or more days past due for all loans tracked jumped to 4.95 percent in the October-to-December quarter.
That marked a sharp rise from the third-quarter’s delinquency rate of 4.67 percent and was the worst showing since the spring of 2003, when the late-payment rate climbed to 4.97 percent.
The association’s survey covers 43.5 million loans.
The percentage of mortgages that started the foreclosure process in the final quarter of last year rose to 0.54 percent, a record high. The previous high, 0.50 percent, occurred in the second quarter of 2002 as the economy was recovering from the blows of the 2001 recession.
…
The late-payment rate for all subprime loans jumped to 13.33 percent in the fourth quarter, up from 12.56 percent in the prior period and the highest in four years. The delinquency rate for subprime borrowers with adjustable-rate mortgages was even higher — 14.44 percent, also the highest in four years.
From CNN/Money:
Will the subprime crisis punish housing markets?
Subprime lenders are already getting crushed – but the impact rising mortgage delinquencies will have on home prices overall is still an open question.
At a minimum, it means financing is drying up for those with less-than-perfect credit and that spells fewer home buyers.
And foreclosed properties will add supply to a housing market that already has too much.
“It’s going to be a really big deal,” says Dean Baker, co-director of the Center for Economic and Policy Research.
“[National] inventory is 20 percent higher than last year, vacancy rates have soared and prices are down about 3 percent,” he says. “Now, with the tightening of credit, I don’t see how prices don’t fall another 5, 6 or 7 percent.”
The tightening of credit could take as many as one million buyers out of the market, says Baker, citing Bear Stearns research. “Even if you cut that in half, say to 400,000 or 500,000, that’s huge.”
Mark Zandi, chief economist for Moody’s Economy.com, is also concerned. “I think the subprime problems will take housing activity to a whole other level,” he says.
Zandi is projecting a doubling of subprime defaults this year to 800,000. “Those homes will go on the market at a discount and will weigh on the market,” he says. He also believes that 500,000 fewer Americans will be able to obtain financing because of the tighter standards.
Just an FYI, ARM resets are set to peak in the second half of 2007.
jb
jb,
Just an FYI, ARM resets are set to peak in the second half of 2007.
To peak or plateau???
CC
[1],
Exploding inventory, much tighter lending standards, rising taxes and overpriced/overbought
POS in NNJ. Only a huge bubble, the air is coming out a wee bit faster. Lower lows and lower highs. Just draw the trend line down. It is firmly established/entrenched. Positive news, if there is any, will be ignored. Negative news will continue to punish this market.
FYI…
New Century was relised as NEWC.PK. It closed at 85 cents today…
Guys,
I’m a big fan of this blog and have been lurking for months. I have access to an institutional platform and picked up a really good report on the subprime blowup by credit suisse… trends, anatomy of, carryover to other markets, what’s in store for the builders…a good commute read. It’s in PDF format and quite lengthy so posting here wont work..besides it’s paid content….drop me a line and I will forward it to you. naz_vegas@yahoo.com
sub-prime is overblown want my thoughts http://www.youtube.com/watch?v=mfLZm9zSkaA