Housing Market Overview And Mortgage Delinquency Numbers

Housing Market Overview And Mortgage Delinquency Numbers

Based on the Mortgage Bankers Association's (MBA) quarterly figures for delinquency and foreclosure, it is believed that the housing market has gained stability now, yet, the real estate prices are predicted to decrease more.

According to the estimates, 13.5% mortgages either foreclosed or are 30 days late in payment (delinquent). Over the last couple of years, this delinquency rate has decreased. Moreover, loans that are late by one payment decreased from 9.13% in the third quarter to 8.22% in the last quarter. This rate is the lowest since late 2007. Also, only 3.6% loans in the mortgage market are more than 90 days late, whereas 6.4% of the loans in this market are more than 60 days late.

Due to a slight increase in employment, the loans that are more than 30 days late have decreased as the labor market strengthens and lesser people miss loan payments. Moreover, the drop in delinquency rates between one unpaid payment and more is due to the fact that most borrowers try to solve their monetary problems and pay back the money owed after a while. This is also because of the 2 million loan modifications that have been approved since the past couple of years.

Although, analysts are mostly attributing positive reviews to the housing market, however, some figures show negative developments. Firstly, the overall decline in the delinquency rates actually hides the increase in the number of borrowers past due in 33 different states and that this rate is still more than 10%. This proves the fact that the countrywide mortgage crisis is still dependent on regional housing crisis.

Secondly, the projected 4.5 million properties in foreclosure are predicted to increase as most of the loans that are 90 days past due end up in a foreclosure which normally takes 1 to 2 years to complete. Also, since the foreclosure process is slow and lenders normally hesitate to report losses, the inventory of foreclosed properties will increase significantly.

Mostly, foreclosures tend to force the home prices to decline; however, an increase in real estate prices also forces timely payment of mortgage bills. This suggests that both these trends are interdependent, and the housing market may not show improvement until the housing prices decline. However, for that to happen, it is necessary to first control the mortgage delinquency rates and the foreclosure inventory.

Additionally, lower prices will result in a higher default rate, driving the prices further down. It is not until the market reaches the bottom that the delinquency rates and prices will improve simultaneously.

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