Wednesday, April 4, 2007

SubPrime Delinquencies Increase

From the WSJ (subscription required):

The First American data show that in January payments were at least 60 days late on 14.3% of "subprime" loans that had been packaged into securities, up from 13.4% in December and 8.4% in January 2006. Subprime loans are those made to borrowers with weak credit records or large debts in relation to their incomes.

For Alt-A loans -- a category between prime and subprime that includes many loans that don't require full documentation of the borrower's income or assets -- the late-payment figure rose to 2.6% in January from 2.3% in December and 1.3% in January 2006.

Here's the graph from the article:

Photo Sharing and Video Hosting at Photobucket

The news from housing continues to deteriorate. Inventories are very high, especially by historical standards. Household debt levels are high by historical and GDP/disposable income measures. Now we have delinquencies increasing -- again.