The first wave of the sub-prime mortgage crisis may have crested. But a new and dire problem faces the industry as delinquency among the safer and higher rated “prime” mortgages – taken by borrowers with good credit – has doubled to 2.7 percent in the past year, according to IHT.com.
The current economic situation in America is weak and unsustainable. The sub-prime crisis should have been easy to predict and avoid. Giving favorable borrowing terms to individuals with unfavorable credit histories was an unnecessary risk, and the industry’s major lenders are now paying for their actions.
Now however, even those with solid credit are being left behind as earnings dwindle and lenders alter repayment schedules in order to avoid going under themselves.
Source International Herald Tribune:
|
Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time. … Much will depend on the course of the economy, particularly unemployment. A weaker job market would push more homeowners toward the financial brink. … "Subprime was the tip of the iceberg," said Thomas Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. "Prime will be far bigger in its impact." |