Global| Dec 06 2007U.S. Mortgage Foreclosures: Conventional Up, Subprime Soared
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers' Association today reported that foreclosures started on all mortgages rose to a still low 0.78% of mortgages outstanding. Nevertheless, that was by far the highest foreclosure rate on record. Foreclosure rates on [...]
The Mortgage Bankers' Association today reported that foreclosures started on all mortgages rose to a still low 0.78% of mortgages outstanding. Nevertheless, that was by far the highest foreclosure rate on record.
Foreclosure rates on both prime and subprime mortgages rose sharply. Rates for prime FRM rose to 0.22% of loans issued from 0.18% in 2Q and an average of 0.14% last year. 28 million loans were serviced.
Foreclosures on prime ARMs similarly rose to 1.02% from 0.62% and from 0.30% last year. 6 million of these loans were serviced.
Foreclosures on subprime mortgage debt, however, rose much more sharply as employment growth slowed recently and interest rates rose. In total, foreclosures on subprime mortgages rose to 3.12% of outstanding loans. That amounted to 6 million loans. The rise was evenly spread between fixed and variable rate loans.
Foreclosures on subprime fixed rate debt rose to 1.38% of loans outstanding for a total of 3 million loans serviced.
On variable rate subprime debt, however, foreclosures soared to a 4.72% rate, up from 3.84% in 2Q and up from 2.0% last year. Three million loans were serviced.
The Rise and Fall of Subprime Mortgages from the Federal Reserve Bank of Dallas can be found here.
These data series are available in Haver's MBAMTG database.
| Mortgages in Foreclosure (%) | 3Q '07 | 2Q '07 | 3Q '06 | 2006 | 2005 | 2004 |
|---|---|---|---|---|---|---|
| All Mortgages | 0.78 | 0.65 | 0.46 | 1.84 | 1.64 | 1.73 |
| Conventional Prime | 0.37 | 0.27 | 0.19 | 0.77 | 0.72 | 0.77 |
| Fixed Rate | 0.22 | 0.18 | 0.13 | 0.14 | 0.15 | 0.16 |
| ARM | 1.02 | 0.62 | 0.30 | 0.30 | 0.19 | 0.18 |
| Subprime | 3.12 | 2.72 | 1.82 | 7.23 | 5.66 | 5.98 |
| Fixed Rate | 1.38 | 1.35 | 0.97 | 1.06 | 1.08 | 1.44 |
| ARM | 4.72 | 3.84 | 2.19 | 2.20 | 1.52 | 1.52 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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