Housing, there aint no cure....

Cure rates on mortgages are exactly what you think they are, people that are delinquent on their mortgage payments returning their payment status to current and therefore "curing" their delinquency. One would think that in a recovery these cure rates would be increasing.....
From Businesswire

NEW YORK--(BUSINESS WIRE)--While the number of U.S. prime RMBS loans rolling into a delinquency status has recently slowed, this improvement is being overwhelmed by the dramatic decrease in delinquency cure rates that has occurred since 2006, according to Fitch Ratings. An increasing number of borrowers who are 'underwater' on their mortgages appear to be driving this trend, as Fitch has also observed.

Delinquency cure rates refer to the percentage of delinquent loans returning to a current payment status each month. Cure rates have declined from an average of 45% during 2000-2006 to the currently level of 6.6%. It is important not only to observe total roll rates, but delinquency cure rates as well, according to Managing Director Roelof Slump.

'Recent stability of loans becoming delinquent do not take into account the drastic decrease in delinquency cure rates experienced in the prime sector since the peak of the housing market,' said Slump. 'While prime has shown the most precipitous decline, rates have dropped in other sectors as well.'

In addition to prime cure rates dropping to 6.6%, Alt-A cure rates have dropped to 4.3%, from an average of 30.2%, and subprime is down to 5.3% from an average of 19.4%. 'Whereas prime had previously been distinct for its relatively high level of delinquency recoveries, by this measure prime is no longer significantly outperforming other sectors,' said Slump.

I think that it is important for me to reiterate this statistic. Cure rates for prime mortgages have declined to 6.6% from 45%. Keep in mind that we have a lot of prime and Alt-A mortgages resetting in the next year or 2, and delinquent payers probably don't have the best chance of refinancing at a significantly better rate. Now think about what that means for the banks who are holding these loans........