The higher end of the US housing market continued to weaken in January as serious delinquencies U.S. prime jumbo loans rose for the 32nd consecutive month, according to Fitch Ratings.
"The new year has brought no relief from declining jumbo loan performance," said Managing Director Vincent Barberio. "The trend line for delinquencies indicates the 10 percent level could be reached as early as next month."
Although prime jumbo loan delinquencies began to rise in the second quarter of 2007, they accelerated in 2009 nearly tripling over the course of the year. Florida saw the biggest monthly jump of the five states with the highest volume of jumbo loans outstanding.
Overall, delinquencies of 60 days or more for prime jumbo loans in residential mortgage backed securities (RMBS) rose to 9.6 percent for January (up from 9.2 percent for December 2009). While delinquency rates on earlier vintages (pre-2005) remain well below that of recent vintages, more seasoned pools have experienced significant deterioration over the past year with 60+ days delinquencies increasing from 1.8 percent to 4.3 percent. While less than 5 percent of prime jumbo senior RMBS classes issued prior to 2005 have been downgraded to date, approximately 40 percent currently have a negative rating outlook as a result of the weakening collateral performance.
The five states with the highest volume of prime jumbo loans outstanding (California, New York, Florida, Virginia, and New Jersey) comprise approximately two-thirds of the loans in question. Prime jumbo RMBS 60+ days delinquencies for these states at January 2010 compared to December 2009, and their approximate share of the $381 billion market, are as follows:
A jumbo mortgage is a mortgage with a loan amount above conventional conforming loan limits. As of 2010, the limit is $417,000 for most of the US, apart from Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the limit is $625,500.
