Smart Borrower Blog

Mortgage Delinquencies Up 50 Percent in Past Year

Recent data from one of the major U.S. credit bureau shows that mortgage delinquencies continue to rise, suggesting that the troubled national housing market has not yet bottomed out.

According to Dann Adams, president of U.S. Information Systems for Equifax Inc, during February 2009, 7 percent of all U.S. mortgage loans were delinquent by at least 30 days or more, representing a 50 percent jump from the same time last year.

Among subprime or poor credit home loans, 39.8 percent of borrowers were delinquent by 30 days or more, up significantly from 23.7 percent in February 2008.

“I’m trying to find optimism in these numbers, but I’m pretty hard pressed to do that,” Adams said. He added that he believes the recent information indicates that more delinquencies and foreclosures are in store for the American mortgage market, leading to a continuing decrease in home prices.

The Equifax report contradicts what some analysts were saying in past weeks about the market showing signs of recovery. The Commerce Department, for example, announced last month that new single-family home sales in February rose to the highest level in 10 months with an annual pace of 337,000. And pending sales of existing homes were up 2.1 percent in February, according to the National Association of Realtors.

The Mortgage Bankers Association’s mortgage application index measuring the volume of applications filed has consistently risen during the past month, with an increase of 4.7 percent during the week ended April 3, reflecting both a rise in both refinance and home purchase mortgage applications.

Still, other reports confirm that the economy is not yet in recovery mode. The U.S. Labor Department reported Friday that employers reduced their payrolls by 663,000 jobs during the month of March, increasing the country’s unemployment rate to 8.5 percent.

And according to Adams, higher unemployment means more home loan delinquencies and eventual foreclosures.