The recession and rising joblessness are taking a toll on America's most credit-worthy borrowers, who are now falling behind on mortgage and credit-card payments at a faster pace than people with poor financial histories.
The mortgage-delinquency rate among so-called subprime borrowers reached 25% in the first quarter but appears to be levelling off, rising only slightly in the second quarter. The pace of delinquencies for prime borrowers is accelerating. Since prime loans account for 80% of U.S. bank exposure to mortgages and credit cards, these losses could ultimately exceed those from weaker borrowers.
'The subprime pain is in the rearview mirror,' says Sanjiv Das, head of Citigroup Inc.'s mortgage business, which is seeing delinquencies rise among prime borrowers, who make up three-quarters of its mortgage portfolio.
Wall Street Journal