Market Talk

Sobering data from the Mortgage Bankers Association on first-quarter delinquency and foreclosure rates, with both at record highs. If you’re among the crowd looking for numbers that are “less bad” or show pace of economic deterioration slowing, these aren’t for you.

The combined percentage of mortgage holders not current on their mortgage was 12.07% on non-seasonally adjusted basis. The organization notes the rates had been subdued in recent quarters due to various foreclosure moratoria. Seasonally adjusted delinquency rate was 9.12% of all loans outstanding, up 124 bps from 4Q, and 277 bps vs year ago. 

“In looking at these numbers, it is important to focus on what has changed as well (as) what continue to be the key drivers of foreclosures,” MBA economist Jay Brinkmann said. ”What has changed is the shifting of the problem somewhat away from the subprime and option ARM/Alt-A loans to the prime fixed-rate loans.”

He notes foreclosure rate on prime fixed-rate loans “has doubled in the last year, and, for the first time since the rapid growth of subprime lending, prime fixed-rate loans now represent the largest share of new foreclosures.”

Ouch. Any one remember ”contained”?

These numbers, and the ugly trend they portend make that reported jump in May consumer confidence all the more baffling. How can folks be more upbeat if more and more are defaulting or having trouble paying their mortgages?

“Looking forward, it does not appear the level of mortgage defaults will begin to fall until after the employment situation begins to improve,” Brinkmann said. So, with unemployment not expected to peak for at least another year,  ”it is unlikely we will see much of an improvement until after that,” he added.

WSJ notes MBA reported that about 5.7% of prime fixed-rate loans were overdue or in foreclosure, up from 3.2% a year earlier.

And how are those subprimers doing?

“Among subprime adjustable-rate loans, the figure jumped to 49% from 37%,” WSJ writes.

What’s not to be confident about, citizen consumer?