US home foreclosures and the rate of homes entering the foreclosure process rose to record highs in the fourth quarter, led by failing subprime loans, the Mortgage Bankers Association said on Thursday.
The rate of failing loans swelled across most mortgage types but was led by a growing wave of subprime borrowers unable to make payments, the trade group said in its delinquency and foreclosure survey.
A record 0.83 percent of US loans were entering the foreclosure process in the last three months of 2007 compared with 0.54 percent in the same time a year earlier. The US mortgage delinquency rate of 5.82 percent was the highest since 1985 and up from the 4.95 percent seen in the fourth quarter of 2006.
For subprime mortgage loans, the delinquency rate rose a full percentage point to 17.31 percent from the previous quarter. The easy terms of subprime loans drew many borrowers with shaky credit, and those failing mortgages have stoked anxiety in credit markets worldwide.
Wall Street and policy-makers have worried that foreclosures will grow when many subprime loans face a built-in interest rate reset in coming months. But MBA's chief economist, Doug Duncan, blamed the current spree of failing loans on poor credit quality of the borrower rather than a rate spike. pending home sales unchanged
Pending sales of previously owned homes were unchanged in January, according to a better-than-expected reading from a real estate trade group report Thursday that points to the possibility of some stability for the beleaguered housing market.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in January, held steady at 85.9. Economists were expecting pending home sales - which are a key gauge of future home sales activity - to fall by 1.0 percent.
NAR chief economist Lawrence Yun predicted that the volume of existing home sales will likely hold steady through late spring with a gradual recovery during the second half of next year, crediting higher mortgage loan limits for the expected improvement.