Graphic: Prime vs. Subprime Late Payments

by Alex Stenback on November 19, 2007

60_days_overdueJust in case you’ve been living under a rock and have some lingering doubts about how poorly sub-prime home loans have been performing, and how utterly, insanely, lax lending standards had become in the sub-prime space, take a look at the graph at right from the WSJ.

That is one wicked looking curve, that has gone vertical, and shows no signs of stopping.  Ugly Stuff.

That said, we did find the performance of prime loans (you know, the ones made to people who actually had some prayer of repaying) encouraging.  Apparently well within historical norms.

In other words, everyone knows sub-prime is junk, but if prime delinquencies start to spike dramatically, look out.  Then we will have an actual housing crisis on our hands.

{ 2 comments… read them below or add one }

Nemoudeis November 23, 2007 at 6:34 am

The primes look stable now, but don’t they have a different reset timeline anyway? I’m not saying that they’ll ever achieve the rocketlike trajectory of the subprimes; but barring any unexpected near-future social and/or political adjustments, I think it’s reasonable to consider it likely that they’ll start looking a whole lot uglier by the end of 2009 or so.

Editor/Alex November 26, 2007 at 9:41 am

I agree, and would expect we see these start to come up – one of the things that has masked prime delinquencies is the ready availability of sub-prime financing to take out delinquent Prime loans.

In this way, sub-prime acted as a “backstop” to the prime market, and kept the prime defaults low.

How much they come up will also be impacted by how the economy, especially the jobs market, holds up through 2010.

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