The mortgage-delinquency rate among so-called subprime borrowers reached 25% in the first quarter but appears to be leveling off, rising only slightly in the second quarter. The pace of delinquencies for prime borrowers is accelerating. Since prime loans account for 80% of U.S. bank exposure to mortgages and credit cards, these losses could ultimately exceed those from weaker borrowers...
In many cases, these "prime" customers... lost their jobs over the past few months and only now are running out of temporary fixes that have been keeping them afloat. The trend signals more bad news for U.S. banks...
In addition to cutting back on spending, strapped prime borrowers often can keep up with their bills longer than subprime borrowers by draining savings accounts, reducing contributions to retirement plans and turning to family members for money....
"They have made adjustments and made adjustments, but then you get to a point where you can't adjust anymore..."
More at the Wall Street Journal
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