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Loan Delinquency Rates for Mortgages - A leading indicator

By
Real Estate Agent with Re/Max Alliance Group

When I talk to people about trends in real estate, a common reaction is to look at the recent comps for a neighborhood, area or city.  But this is looking at the wake of the boat and trying to predict the direction the boat is going.  The Mortgage Bankers Association publishes a quarterly set of statistics that provide leading indicators of where the market may be headed.  They are the National Delinquency Survey, the delinquency rate for mortgage loans on one-to-four-unit residential properties.  The numbers provide a snap shot of the ability of current mortgage holders to keep current on their payments. 

The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.  Nationally, this number was 4.57% at the end of the second quarter, 27 basis points above the number from a year ago.  Combined with the percentage of loans in foreclosure, the total percentage of loans at least one payment past due and those in foreclosure was 13.97%.  The other rate mentioned by the survey is the seriously delinquency rate, loans 90 days past due or in the process of foreclosure.  The number came in at 9.11 %   All of these metrics decreased from the first quarter of 2010, but were higher than the same time last year.  Let's hope that we've seen the peak and are on the down hill side. 

The crux of the matter is emphasized by Jay Brinkmann, MBA's chief economist when he stated, "Ultimately the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story. Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers. Until we see the increase in the number of households that comes with an increase in the number of paychecks, all measures of the health of the housing industry will continue to be weak."

As we go forward, watching these indicators will also provide guidance in what the future of real estate prices holds in the near future. Hopefully, in a positive direction.

About the Author...
This article was provided by Gordon Baker, GRI, CDPE. E-mail: GordonBaker@remax.net, Cell Phone: 480-326-8571.  You can also find valleywide information at Phoenix Real Estate Info.  Phoenix area residents needing assistance can also visit Phoenix short sale help.

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                                                  Contact Gordon Baker, GRI, CDPE

                                                Re/Max Alliance Group

 

E-mail: GordonBaker@remax.net

 

Comments (2)

Cindy Smith
Century 21 Nachman Realty - Elizabeth City, NC

Great article and lots of good information.  Thanks for sharing.

Sep 26, 2010 12:53 PM
Troy Funk
Allison James Estates & Homes, Sarasota 941-957-3737 - Sarasota, FL
Broker / Associate

Very serious and unfortunate news.  How do we prepare for this?

Sep 26, 2010 02:44 PM