Profitale

The delinquency rate for prime mortgages which is worth less than $417,00 was 2,44% in the month of May, compared to 1.38% one year earlier.

Delinquencies raised even more for prime loans, the so-called jumbo loans. Their raise was 4.03% of outstanding loans in May, compared to 1.11% a year earlier

According to LoanPerformance, prime loans issued in 2007 are worst of all, cause they are failing at a rate nearly triple that of the one issued in 2006.

Last month, WM CEO Kerry Killinger said that the bank’s prime loan delinquencies are on the rise, and as of the end of June, 2.19% of the prime loans issued by WaMU in 2007 were already delinquent, compared to 1,40% of prime loans in 2005.

Most of us do know its such a mess, but who would imagine? The crisis starts to hit Europe too. They say that home prices will drop for quite a while, maybe several years.

The failure of the prime mortgages will make it even more difficult for new borrowers to find affordable loans, which is going to slow sales additionally. The lending standards have been tightening, but in case prime loans start to look risky, the lenders will be even more conservative about who gets a mortgage and when he does.

There will be probably even harder times in the future before the markets stabilize and the recovery begins.

If you enjoyed this post, make sure you subscribe to my RSS feed!