It said 10.8 percent of subprime mortgages were 60 days overdue, compared with 4.6 percent in the category with credit scores just above subprime, indicating that the threat to the mortgage market may be spreading.Does anyone still hold out hope that this mortgage crisis will not spread into the greater economy? You need to remember that the U.S. savings rate is negative which means those most at risk for foreclosure have the least saved to avoid it.
While maintaining that it is "comfortable" with its mortgage exposure, AIG gave a gloomy assessment of the market in a presentation to investors and analysts.
It said delinquency rates for first mortgages had risen to 3.98 percent in June from 3.56 in April and a low of 3.08 in July 2005. First mortgages represent 90 percent of AIG's domestic mortgage business.
AIG divided its mortgage portfolio into three categories: subprime, for borrowers with credit scores below 620; "non-prime," for borrowers with credit scores between 620 and 659; and prime, for borrowers with credit ratings above 660.
As of June 30, AIG's finance arm, which originates first and second mortgages, recorded delinquencies of 3.68 percent in subprime, 2.13 percent in non-prime, and 0.81 percent in prime.
Unfortunately for many the dream of home ownership has turned into a nightmare that may yet effect us all.