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Big Drop in Mortgage Delinquencies

May 18, 2012 by  
Filed under Blogs, Real Estate

by Credit.com

Mortgage late payments dropping

The rate at which consumers fell behind on their home loans declined considerably in the first quarter of the year, and now stand at levels not seen in years.

The delinquency rate on home loans for properties of between one and four units fell to 7.4 percent of all outstanding loans in the first quarter of the year, down from 7.58 percent in the fourth quarter of 2011, and 8.32 percent in the same period last year, according to the latest statistics from the Mortgage Bankers Association. While declines are traditionally viewed in the first quarter of every year, the MBA’s data shows that the drops this year were more significant than traditional adjustments would have predicted, showing that the declines are real, rather than the result of seasonal norms.

“Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future,” said Michael Fratantoni, the MBA’s vice president of research and economics. “The percentage of loans three payments or more past due, the loans that represent the backlog of problems that still need to be handled, is down to the lowest level since the end of 2008. Foreclosure starts are at their lowest level since the end of 2007.”

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Delinquency fell for all types of mortgages except VA loans on a quarter-over-quarter basis, the report said. Prime fixed rate loan delinquency now stands at 4.07 percent, and late payments for prime adjustable-rate mortgages dropped to 9.05 percent, down from 9.22 percent in the fourth quarter. Further, loans backed by the Federal Housing Administration also saw drops in delinquency, falling to 12 percent from 12.36 percent a quarter earlier. The rate of homes that were in foreclosure increased on a quarterly basis, however, rising to 4.39 percent.

As the economy continues to generally improve, consumers are finding themselves in a better position to pay off all their outstanding debts on time. Factors such as declining unemployment rates and rising salaries have contributed to Americans feeling better about their personal financial situations. Experts believe that these trends will likely continue for some time, meaning that the housing industry may continue to improve, encouraging more qualified buyers to enter the market.

Source: Credit.com (http://s.tt/1cf6x)


One Comment on "Big Drop in Mortgage Delinquencies"

  1. Rafaela on Fri, 8th Jun 2012 1:12 PM 

    You never get a boost, as credit score takes time to
    aacumulcte, but the ideal number of credit cards is 3.
    If you have less than 3 the score goes down, if you
    have more than 3 the score may go down too. But if
    you already have more than three, do not close unused
    cards, just put them away. Since the length of time
    accounts established also matters, what also matters
    is your total debt/available credit ratio. So say you
    have 6 credit cards with total available credit of
    35,000 and you have overall balance of 10,000 in 3
    cards that is a little less than 33% of your available
    credit looks good. You close 3 unused cards, and your
    available credit goes down to 20,000, now your ratio is
    50% this is a borderline. Over 50% is definitely bad!
    So, if you have 3 cards, do not open new ones, if you
    have 6 but using 2-3, just leave other cards alone,
    unless terms become a burden such as annual fees etc.
    Then close non-needed cards.

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