Thursday, June 18, 2009

The deteriorating credit quality of borrowers

Banks can not find high quality borrowers anyone. Higher default rates have forced banks to write off larger amounts. In March 2009, write offs reached an all time high.

However, a note of caution, bank balance sheets are much larger now. As a proportion of total lending, mortgage write-offs are still lower than the early 1990s. Just wait, default rates are rising and could easily surpass the earlier peak.

1 comment:

  1. If interest rates include the costs of default,
    and mortgage default rates are rising,
    then mortgage interest rates must...
    oh no, too difficult to work out.