Next year could be a tough one in the subprime mortgage area, warns Fitch Ratings. The investment research firm is predicting that the higher rate loans will experience a 10 to 15 percent rise in delinquencies in 2006, as the poorer people who typically take such loans are hit with a triple whammy of higher debt, higher energy costs and flattening home prices. Roughly 19 percent of all home loans are subprime, up from 5 percent in the mid-1990s. Bigger problems could be around the corner in 2007 when many of the adjustable rates will reset.
Mortgage Stress Seen for ’06 [Washington Post]