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One in ten US mortgages in arrears

US mortgage arrears rose to 9.24 per cent in the last quarter, the highest rate recorded in more than 35 years.

The figures from the Mortgage Brokers Association found that 9.24 per cent of all outstanding US loans were in arrears for Q2 2009, up 0.12 per cent on Q1 figures and up 2.83 per cent on Q2 2008.

The MBA says this is the highest rate of delinquencies it has ever seen, based on records dating back to 1972.

The US mortgage body also found that 1.38 per cent of all loans, roughly one in eight delinquent loans, were in the process of being repossessed.

MBA chief economist Jay Brinkmann says that while the rate of new repossessions started was essentially unchanged from Q1, there was a major drop in repossessions on sub-prime loans. The drop, however, was offset by increases in the repossession rates on the other types of loans, with prime fixed rate loans having the biggest increase – although MBA considers self-cert, or Alt-A loans, to be within the prime fixed rate category.

Brinkmann says: “As a sign that mortgage performance is once again being driven by unemployment, prime fixed-rate loans now account for one in three foreclosure starts. A year ago they accounted for one in five.”

“As for the outlook, it is unlikely we will see meaningful reductions in the foreclosure and delinquency rates until the employment situation improves.”

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