MADELEINE BRAND, host:
From NPR News, this is DAY TO DAY.
More bad housing news today. The home building company Toll Brothers says its quarterly profits dropped $150 million from a year ago. And Accredited Home Lenders - that's a San Diego mortgage company - has stopped taking loan applications. It will close its retail branches nationwide and lay off 1600 workers.
Joining us now is John Dimsdale from MARKETPLACE. Well, John, let's start with the Toll Brothers news. Profits down $150 million? That seems like a lot.
JOHN DIMSDALE: Yeah, yeah. Well, it seems like demand for their homes is drawing up. The CEO of the company says they've had more cancellations, more buyers pulling out of new home sales contracts than any time in their 21-year history.
BRAND: And what caused such a big drop?
DIMSDALE: Well, there's the mortgage, the subprime mortgage problems that may mean that the buyers and lenders are having trouble with their credit ratings.
BRAND: So this is, again, fallout from the subprime mortgage problem, and also affecting this company, Accredited Home Lenders - closing branches, laying off workers. What's going on with those mortgages there, subprime or not?
DIMSDALE: Well, the company says that it's not going out of business but it's closing its retail lending, laying off half its headquarters staff; you know, that can't be a good sign. They will honor their existing commitments.
There was more bad news today. The Federal Deposit Insurance Corporation, the bank regulator, reported that delinquent mortgages held by U.S. banks - those are mortgage payments that are overdue by 90 days or more - went up 47 percent over last year.
BRAND: Hmmm. So it's really fanning out. Any other sectors being affected?
DIMSDALE: Well, the National Association of Realtors now expects that its membership will decline this year, and that's the first time in a decade. And probably most ominous for consumers, The Wall Street Journal says people are beginning to find it more expensive to get other kinds of consumer credit. Some credit card companies are raising fees and interest rates.
Citigroup's car loan division is charging higher rates for people with less than perfect credit. So lenders are getting skittish about floating loans because of the uncertainty of where interest rates are going to land.
BRAND: And yet the stock markets, both here and abroad, seem to be doing okay, seem to have stabilized over the past few days.
DIMSDALE: Yeah, that's based on the attention that the problem is getting now from central banks and governments. You know, the Federal Reserve bank continues to make cash available for banks to borrow and to assure them that their credit will be covered. And there's an anticipation that if things get worse, central banks, including the Fed, will lower interest rates.
BRAND: And John, finally, if someone has a mortgage or they want to get one or they want to refinance, should they be worried?
DIMSDALE: Not if you have a good credit rating. These overdue mortgages are only 2.5 percent of the total so far, and the government's working on finding ways for refinancing options.
BRAND: Great. Well thank you, John. That's John Dimsdale of public radio's daily business show MARKETPLACE, and it's produced by American Public Media.
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