Tuesday, April 7, 2009

Mortgage Delinquencies Soar Across the US

On the national front the news is grim – 7% of borrowers are 30 or more days delinquent on their mortgages – up more than 50% from last year.

The numbers are worse for sub-prime borrowers – 40% are 30 or more days behind on their payments.

The continued increase in mortgage delinquencies foreshadows more foreclosures, short sales and home price declines as homeowners default and banks then repossess the homes to sell them at deep discounts.

The rising jobless rate manifests itself in consumers' increasing reliance on credit cards even as lenders try to restrict access to credit, Adams said.

The data shows that lenders have good reason to be wary. Bank card delinquency is at its highest level in the past five years. Some 4.5 percent of total balances on bank-issued credit cards were at 60 days past due in February, a 32.7 percent increase from a year earlier. [Reuters]

We’d like to underline that trends vary on a micro level, and national statistics shouldn’t be applied in a blanket fashion to any particular state, city or neighborhood. But with 8.3% unemployment nationwide – and rising – expect a steady stream of short sales, foreclosures and REO auctions.