Delinquency Rate Growing More Slowly

Wall Street Journal (04/30/08) P. C5; Ng, Serena
Using information from monthly remittance reports submitted to mortgage-backed securities trustees, Wachovia Capital Markets reports a slower gain in subprime mortgage delinquency rates in April. The report indicates that 35.9 percent of subprime mortgages written during the last six months of 2005 were more than 60 days delinquent in April, up 1.23 percentage points from the previous month; in contrast, the delinquency rate on these loans increased 1.61 percentage points in March, 2.36 points in February and 2.64 points in January. Anywhere from 25 percent to 40 percent of subprime loans written in 2006 and the first six months of 2007 are more than 60 days delinquent. Wachovia senior analyst Glenn Schultz says, "The trajectory is beginning to flatten out, and this could be a turning point for prices [of mortgage-backed securities]." However, other experts suspect the slower delinquency rates can be attributed to borrowers catching up their payments using tax refunds, noting that ongoing home price declines and higher unemployment rates will drive up delinquencies in the coming months.