Where do we, as the state of Kansas, stand in the subprime mess? In March, the Federal Reserve Bank of Kansas City came out with a report on subprime loans in Kansas City. Some of the key findings in that report show that:
* Over 60% of subprime borrowers are successful in repaying their mortgages but paymet deliquencies are still above national averages. Currently, 28% of subprime borrowers are past due by more than 30 days.
* Kansas City borrowers had lower average credit scores but were more likely to have provided full documentation(as opposed to stated income or no documentation loans). In Kansas City, the average credit score on a subprime loan was 603 as opposed to the national average of 617. However, full documentation was provided 81% of the time vs the national average of 67%
* Kansas City subprime borrowers are paying higher than average interest rates on fixed and adjustable mortgages. The national average on a fixed rate subprime mortgage is 7.9% The average for the Kansas City-area subprime borrower is 8.5% For adjustable rates, the national average is 8.1% vs the Kansas City average of 8.5%
There may be relief in the future however. Sub-prime borrowers with adjustable rate mortgages are generally indexed through LIBOR, the London Interbank Offered Rate. LIBOR rates have fallen the in preceeding months and borrowers with adjustable rates that are due to "reset" in the near future are not likely to see big increases...rates are expected to reset near 9.3% on average. A welcome change from the almost 12% that and adjustable rate borrower would have been likely to reset to through much of 2007.