The Debt-Ometers; How to Read the Subprime and Other Consumer-Loan Dials

-- Widely publicized delinquencies in subprime mortgages are concentrated in variable-rate mortgages, which account for about two- thirds of the subprime mortgages outstanding. Delinquencies on fixed- rate, subprime loans are relatively stable. But, delinquency rates on prime, variable-rate mortgage...

Full description

Saved in:
Bibliographic Details
Published inThe Wall Street journal. Eastern edition
Main Author Sudeep Reddy and Conor Dougherty
Format Newspaper Article
LanguageEnglish
Published New York, N.Y Dow Jones & Company Inc 03.08.2007
EditionEastern edition
Subjects
Automobile dealers
Bankers associations
Central banks
Consumer credit
Consumer spending
Consumers
Credit cards
Delinquency
Economic indicators
Equity
Housing prices
Lines of credit
Loans
Mortgage banks
Mortgage companies
Mortgage servicing
Subprime lending
Trends
Online AccessGet full text

Cover

More Information
Summary:-- Widely publicized delinquencies in subprime mortgages are concentrated in variable-rate mortgages, which account for about two- thirds of the subprime mortgages outstanding. Delinquencies on fixed- rate, subprime loans are relatively stable. But, delinquency rates on prime, variable-rate mortgages also are inching up, a particular worry as rates on cheap adjustable-rate mortgages climb. The Fed, drawing from data supplied by banks, reports its own delinquency rates for residential loans, including mortgages and home- equity lines of credit, 60 days after a quarter ends. But Fed data don't distinguish between variable and fixed-rate mortgages, so the Fed used LoanPerformance data in its recent semiannual report to Congress to make the point that mortgage delinquency problems are, so far, concentrated in subprime, variable-rate mortgages. Economists offer several possible explanations. The shift "may be related to the fact that we've got people who have mortgages for the first time, or they have different kinds of mortgages," said Robert Hunt, a Federal Reserve Bank of Philadelphia economist. "So, the shock hit them before they understood what's going on."
ISSN:0099-9660