Almost one in four subprime mortgage holders have fallen behind in their payments, a sharp rise from the one in five delinquent borrowers a year ago, according to Standard & Poor’s, the rating agency.

The percentage of loans 90 days or more behind on payments – the category most likely to default – rose to over 13% of all loans, up from 9.7% in the third quarter of 2007.

'The roll rate from the 90-plus-day delinquency into repossession is likely to be much higher than in benign economic conditions when borrowers still have options to refinance their way out of trouble or sell their property to pay off debts,' the report says.

The stock of repossessed properties on lenders’ books has increased to almost 2.8% of all loans, up from 1.5% in the same quarter of 2007, according to S&P’s data – despite pledges from lenders to help borrowers stay in their homes.

Financial Times