Thursday, August 07, 2008

2007 Was A Very Bad Year

For mortgages.

Mortgages issued in the first part of 2007 are going bad at a pace that far outstrips the 2006 vintage, suggesting that the blow to the financial system from U.S. housing woes will be deeper than many people earlier estimated.

An analysis prepared for The Wall Street Journal by the Federal Deposit Insurance Corp. shows that 0.91% of prime mortgages from 2007 were seriously delinquent after 12 months, meaning they were in foreclosure or at least 90 days past due. The equivalent figure for 2006 prime mortgages was just 0.33% after 12 months. The data reflect delinquencies as of April 30.

Some suggestion that lending practices got better in the second half of the year, though I doubt they changed too much. My guess is HELOCs and other refinancing did start to dry up quicker, making it harder for people to borrow to pay their mortgage.