By Selena Cowell
An appreciable declination was noticed in the US mortgage delinquency rate in the 1st quarter of 2012. This has brought the delinquency rate down to its lowest mark since the year 2008. Such a notable decrease in the rate can be attributed to the improvements in the job market that made sure borrowers paid their outstanding bills without fail. Stricter lending standards played a major role in restricting the number of defaults to a minimum.
A report from TransUnion, one of the three big credit reporting companies, puts the national mortgage delinquency rate at 5.41% in the 3rd quarter of 2012. The rate reached its highest mark of 10.1% in the first 3 months of the year 2010. It registered the lowest ever figure of 6.99% in the 3rd quarter of 2008. Such news is attractive enough to let anyone keep their loan mortgage calculator aside and focus on what’s on the cards.
According to Michael Fratantoni, the vice president of the research and economics department of the group, delinquencies have been showing ample signs of improvement. The fact that the newer delinquencies are down to their lowest mark since the year 2007 points to lesser number of future problems.
The Effect of Falling Delinquencies
The free falling rates of delinquencies are going to help the housing market recover from the losses. This will happen because of the combination of the low interest rates and prices that will cause a stimulation of the overall demand. Limitations are also expected on the foreclosures. There have also been great improvements in the housing affordability rates. This is clearly evident from a recent report released by the National Association of Realtors. The sales figures of previously owned homes have increased by 5.9% to an annual rate of 5.04 million.
According to a report from the Commerce Department, housing starts rose 3.6% to an annual rate of 894,000. This reinforced the fact that the real estate market has been gaining lots of strength.
Further, there has been an appreciable drop in the rates of unemployment in the US. The unemployment rate in the US continues to remain at 7.8% as of December, 2012. The 30-year fixed loans also fell sharply to register a low of 3.39% in the 3rd quarter of 2012 is what Freddie Mac has to say. According to the McLean, a mortgage finance company based in Virginia, the average 15-year rate dropped to 2.7%. It’s been said that people have already seen the worst face of the foreclosure crisis and better things lie ahead.
The Economy Strengthens
All of these are going to have a positive effect on the country’s economy. After all, there has been no mentionable growth in the employment rates since 2008. With the delinquency levels dropping, people are going to find jobs as well as buy homes. It is really important for the real estate sector to improve for a notable and impressive economic improvement. It remains to be seen how well things can turn out for the whole US economy in the long run.
About The Author - Selena Cowell is associated mainly with the MortgageFit Community and has contributed to a number of other financial websites. She has written articles on how foreclosure can be stalled, real estate market, mortgage loans, taking out the right mortgage and more.
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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