Property | General

Mortgagors back in the driver seat

Homeowners missing loan installments in the US are at their lowest point in more than three years

  • AP
  • Published: 15:00 November 19, 2012
  • Gulf News

  • Image Credit: AP
  • A home for sale attracts a potential buyer in Leucadia, California. Average US rates on fixed mortgages fell to fresh record lows this week.

New York: US homeowners are doing a better job of keeping up with their mortgage payments, aided by an improving housing market and low interest rates that are making it easier to refinance.

The per centage of mortgage holders at least two months behind on their payments fell in the third quarter to 5.41 per cent, the lowest point in more than three years, credit reporting agency TransUnion said Tuesday. per cent

The rate was down from 5.49 per cent in the second quarter and was nearly 8 per cent below the 5.88 per cent rate in the third quarter last year, the company said.

The mortgage delinquency rate hasn’t been this low since the first quarter of 2009. Still, it remains well above the 1 per cent to 2 per cent average historical range, an indication that many homeowners still are struggling to make their payments.

Many homeowners changed the way they prioritize their financial obligations after the value of their homes plummeted with the housing crash. That has yet to change.

“People used to pay their mortgage first, and now they pay their auto and their credit cards before their mortgage,” said Tim Martin, group vice president of US housing for TransUnion. “We think that’s probably still in place.”

Even so, some homeowners are benefiting from the gradual turnaround in housing this year.

US home prices jumped 5 per cent in September compared with a year ago, the largest year-over-year increase since July 2006, according to data provider CoreLogic.

Higher prices help bring down the number of homeowners who owe more on their mortgages than their homes are worth, potentially making it easier for them to lower their monthly payments by refinancing.

And interest rates remain near record lows, making it possible for more homeowners to qualify for refinancing. The average rate on a 30-year mortgage was 3.40 per cent last week and has been below 4 per cent all year.

Meanwhile, there are some signals that the job market is improving. Employers added 171,000 jobs in October and hiring in August and September was much stronger than first estimated. The economy has gained an average of 173,000 jobs a month since July. That’s up from 67,000 a month in April through June.

Still, unemployment remains stubbornly high at just under 8 per cent.

At the state level, Florida led the nation in the third quarter with the highest mortgage delinquency rate of any state at 13.09 per cent. It was followed by Nevada at 10.93 per cent” New Jersey at 8.33 per cent” and, Maryland at 6.86 per cent.

The states with the lowest delinquency rate were North Dakota at 1.44 per cent” South Dakota at 2.21 per cent” Nebraska at 2.25 per cent” and, Alaska at 2.48 per cent.

TransUnion anticipates the national mortgage delinquency rate will decline slightly in the fourth quarter to about 5.35 per cent, even though some cash-strapped homeowners typically elect to put off making some of their debt payments so they can spend on holiday shopping.

The company’s research is culled from TransUnion’s database of 27 million anonymous consumer records.