Subprime Mortgages and Market Datapoints

by: Barry Ritholtz

Some fascinating data from the WSJ on real estate:

• Nearly 1.2 million foreclosure filings were reported last year, a 42% rise from 2005. That is a rate of one in every 92 U.S. households.

  • Colorado, Georgia and Nevada had the nation's highest foreclosure rates last year, according to RealtyTrac. Among the top 100 metropolitan areas, Detroit, Atlanta and Indianapolis topped the list.
  • About 80% of subprime mortgages today are adjustable-rate mortgages, or ARMs, that have been nicknamed "exploding ARMs" because they have low fixed-interest payments in their first few years but then usually adjust to higher interest payments.
  • Creative new subprime loans - "piggyback," "interest-only," and "no-doc" loans, among others - accounted for 47% of total loans issued last year. At the start of the decade, they were less than 2% of total mortgage loans.
  • Borrowers have never been more leveraged. Loan-to-value ratios, the loan amount expressed as a percent of the property value, have grown to 86.5% last year from 78% in 2000.
  • subprime

    The Subprime Market's Rough Road
    WSJ, February 17, 2007; Page A7