Overdue mortgages jump sharply

08:09 | 27.05.08

New data from Standard & Poor’s provide the first glimpse into how mortgages are performing this year. The data are based on the behaviour of home buyers whose loans have been packed into mortgage-backed securities – which account for 80% of the £43bn sub-prime mortgage market.

Of all loans to borrowers with poor or no credit history, total delinquencies – defined as arrears of more than 30 days – made up 21.73% at the end of March while those seriously delinquent by 90 days or more, including some already in foreclosure, edged into double digits at 10.60%.

The figures show that more than £7bn worth of loans are at risk of default unless lenders agree to modify the loan terms. S&P believes that the loans backing the securities it rates are a representative sample of the market as a whole. The rise in sub-prime arrears threatens further problems not only for the economy but also for those financial institutions that bought securities backed by the loans.

Financial Times

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