Despite government attempts to aid home owners in trouble with mortgages, the share of mortgages that are seriously delinquent—with payments over due by 60 days or more—is still growing. Serious delinquencies grew by nearly 9%, and now stands at 5% of all mortgages.
The good news is this represents a dramatic slowdown in the growth of serious delinquencies. In the fourth quarter of 2008, serious delinquencies jumped from 3.54 to 4.60, a 30% increase from the previous quarter.
Overall the percentage of mortgages that are current and performing remained steady, at around 90 per cent—just about where it was in the last quarter of 2008. Much of this is because early stage delinquencies shrunk. But don’t get too excited about that, since the contraction is most likely driven by seasonal effects and probably isn’t sustainable.
The most troubling news, as we mentioned this morning, was the continued risie of delinquent of prime loans. Serious delinquencies of prime mortgages climbed by more than 20 per cent from the prior quarter to 2.9 per cent of prime mortgages. The year over year data makes this look absolutely brutal, showing a doubling of serious delinqencies.
But here too it looks like the growth is slowing down. The fourth quarter of 2008 saw a jump from 1.67 to 2.40, an increase of nearly 44 per cent. In short, the delinquencies are still rising but not as fast as they were at the end of last year.
The numbers that really had us scratching our head was the contraction of the number of seriously delinquent subprime loans. According to the government statistics, there were 3.7% fewer seriously delinquent subprime loans in the first quarter of 2009 than in the fourth quarter of 2008. So does that mean that subprime borrowers are paying off their loans in greater numbers? No. What seems to be happening is that the overall number of subprime loans has shrunk, probably because of foreclosures. But of those that are still outstanding, seriously delinquencies continued to grow, albeit of the much slower rate of 1.5 per cent.
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