Mortgage Daily Logo

Fixed Rate Defaults Jump

Mortgage News


Fixed Rate Defaults Jump

FBR default report

February 26, 2007


photo of Patrick Crowley
Rising defaults on subprime mortgages aren’t limited to adjustable-rate loans and are weighing on new issue spreads, according to a new investment banking report.Defaults on adjustable-rate subprime securities continue to trend at a “whopping” pace compared to recent years, according to the report from Friedman Billings Ramsey & Co.

The default rate of the 2006 originations “rose briskly” to 4.62% in January, a 21.3% increase over the previous month, the report indicated.

But the real bump comes in comparing the 2006 default rate to 2005 and 2004.

Last year’s rate was 51.6% over 2005 originations and “a whopping 137%” over 2004, according to the report.

“In relation to previous origination years the default rates of 2005 and 2006 origination years deteriorated considerably faster than the 2002-2004 origination years,” the investment banker said.

“The default rate of the 2006 origination year is significantly higher (by 61.1%) than the weighted-average default rate of all adjustable-rate securities originated during 2000-2006 at the same of 12 months.”

And defaults of fixed-rates are also rising with 2006 originations growing by 8.1% to 2.81% in January while 2005 defaults grew by 5.7% to 6.11% from the prior month.

“Similar to its adjustable-rate counterpart, the 2006 origination year of fixed-rate (originations) also experienced weaker credit performance than earlier origination years at the same age,” the firm reported.

In a report issued earlier this month, FBR, which is based in Arlington, Va., reported that default rates have risen to their highest levels in six years.

And Credit Suisse has reported that 25 percent of subprime mortgage deals issued last year have hit a delinquency rate of at least 8 percent at the end of 2006.

The problems with the subprime market are also impacting new issues, FBR said in the latest report.

“The deteriorating credit performance of the subprime mortgage market has begun to weight heavily on new issue spreads,” the company said.

Patrick Crowley is a feature journalist and blogger for He is also a reporter, blogger and columnist for The Cincinnati Enquirer.
e-mail Patrick at:

Related Posts

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

The Mortgage Graveyard 2018 Archives

The Mortgage Graveyard 2018 Archives Failed, Struggling and Acquired Mortgage-Related Companies Non-Bank Closures 3 Bank Failures (FDIC) 0 Credit Union Failures 0 Total Mortgage-Related Failures 3  

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

MBS Statistics

MBS Statistics Non-Agency Issuance 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 Private Label RMBS Issuance (S&P) $80 billion to $100 billion (est) $70 billion $34...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Sample E-Mail

Sample E-Mail   Covering the Real Estate Finance Since 1999  Mortgage Industry News free news content | view headlines online  Advertorial Text Ad This ad includes a linked bold headline of up to 50 characters and up to 100 words of text. The ad can be...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI