Serious delinquencies of U.S. prime-rated residential mortgages rose in June

-By Tess Stynes, Dow Jones Newswires

Serious delinquencies of U.S. prime-rated residential mortgages rose in June from May, the 37th-straight month of sequential gains, though subprime and Alt-A loans extended a recent trend of declines, according to Fitch Ratings.

While noting the continued drops are "noteworthy," the portion of borrowers who had been current in the prior month but fell behind--or roll rate--remains elevated.

"The persistently high roll rates indicate that the delinquency declines are more a reflection of increased property liquidation and ongoing loan-modification activity than of widespread improvement in mortgage-payment performance," said Fitch's Vincent Barberio.

Mortgage delinquencies have shown signs of plateau in recent months, with a number of measures showing their first declines since 2007, when the housing bubble began to lose air.

Delinquencies of 60 days or more on prime-rated jumbo mortgages, or those of at least $417,000, rose to 10.4% in June from 6.4% a year earlier and 10.3% in May. Such loans saw the biggest increase in delinquencies last year among home borrowings, though the overall rate remains far below those of other mortgage types. Roll rates remained above 1% after dipping below that level in April, but were lower than their 1.4% peak in March.

The prime-rated jumbo loans make up the vast majority of the prime-rated mortgages in Fitch's readings.

Serious delinquencies for Alt-A loans--typically given to prime-rated borrowers who did not document assets and/or income, declined to 33.7% in June from 33.9% in May, but were up from 29.1% a year earlier. Roll rates rose on month to 3.4% from 3.1%. Prior to a sharp April drop, roll rates haven't fallen below 3% since June 2008.

Subprime delinquencies dropped to 43.7% from 44.8% in May but were above the prior year's 41.2% The June roll rate fell to 4.2% from 4.3% sequentially but was well below the 12-month average of 5.3%.

Grandpa: The U.S. Equity market will continue to blast into a state of euphoria as Alcoa beat the street. Who cares about delinquencies when an aluminum company beats reduced earnings expectations.