Sub-prime arrears highest ever

Standard & Poor’s (S&P) has recorded its highest ever level of arrears in sub-prime mortgages. The ratings agency said that arrears have increased by 24 per cent year on year as a result of house price decline, refinancing problems, and a lack of affordability. Mortgages taken out in 2005 and 2006 now have the highest 90+ day arrears rates and these are ‘rising sharply’. An analyst at S&P said the recent cuts in interest rates should improve the affordability of mortgage payments, however a worsening economic environment is likely to result in further increases in repossessions. It also found that the average time from repossession to sale of properties was around five months.