US prime borrowers fall behind on payments
By Nicole Bullock and Saskia Scholtes in New York
Published: August 4 2009 22:30 | Last updated: August 4 2009 22:30
The number of US prime borrowers behind on home loan payments has risen sharply, signalling further problems for banks and investors.
Standard & Poor’s said higher unemployment combined with a prolonged housing market slump had afflicted even the highest quality borrowers……..
Alt-A and subprime home loans, which have been at the epicentre of the mortgage meltdown, showed signs of stability. Non-performing balances of Alt-A mortgages rose just 3.2 per cent in the second quarter, while the dollar volume of non-performing subprime mortgages fell 4.2 per cent.
S&P said the most troubled borrowers had by now defaulted so securitised subprime home loans could be past the peak for defaults.
It warned that rising unemployment continued to put mortgages at risk of default, in spite of signs of a bottom for house prices. US unemployment hit 9.5 per cent in June.
“Today’s housing market places many prime borrowers underwater and thus unable to pay off their loans even if they could find a buyer,” the research arm of S&P said.