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  • Writer's pictureRobert Baharian

This one delinquencies

It was over 10 years ago when the GFC ran havoc through global markets. A man made crisis crushed financial markets, economies, and lives. Today, we're faced with a very different crisis. Notwithstanding the crisis, the impact on peoples' financial lives is generally the same.

In today's chart we look at US mortgage delinquencies. The present crisis is beginning to reveal some hair line cracks in households. I've plotted delinquencies 30 days, 60 days, 90 days, foreclosures started, as well as total delinquencies.

We've seen a rapid rise in 30 day delinquencies. We're starting to see 60 day delinquencies increase, and more critically, 90 day delinquencies are beginning to show signs of upward movement. The one to watch here is Foreclosures Started.

The US government, like most governments around the world, are providing financial support to households which is no doubt watering the situation down (for now). If we continue to see a rise in 60 and 90+ day delinquencies, we'll begin to see a rise is foreclosures.

Having said this, we are nowhere near levels seen during the GFC. As governments attempt to navigate a soft landing (as soft as it can be considering the circumstances), we'll need to wait and see the implication of the termination of stimulus measures in the coming months. We'll then know whether this jolt in delinquencies is temporary or we're headed for a downturn akin to the financial crisis.


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