Fewer Delinquent Mortgage Balances Is Good News for Lenders
What a difference a year makes — especially when it comes to mortgage balances. Delinquent mortgages account for a smaller percentage of outstanding balances than they did last year, according to the latest Equifax National Consumer Credit Trends Report. This is good news for businesses that extend credit to customers, as it indicates an overall improvement in economic conditions. People are willing to borrow and, more importantly, are also making their payments. Not only that, but they are borrowing increasingly more money.
Market trends suggest improvement
The March 2014 Report from Equifax indicates that first mortgages 30 days or more past due now account for just 5.65 percent of outstanding balances — a decrease of 22 percent since the same time last year. Additionally, the total amount owing on delinquent first mortgages 90 days past due or in foreclosure has decreased almost 27 percent since last year. At the same time, the total of first mortgage balances has increased 2.8 percent since last year — the largest increase in 48 months. These numbers indicate that while business are lending more, fewer people are defaulting.
Summer season points to further delinquency improvements
According to Equifax Chief Economist Amy Crew Cutts, typical spring and summer home buying trends point to more good news. Cutts says the better weather should only benefit the current trend of improved statistics on delinquent mortgages. Traditional trends show that warmer temperatures and sunshine entice people out to view and buy homes, causing the volume of new mortgage loans to rise. As the long and snowy winter comes to an end, people are ready to get out and about. At the same time, better employment conditions and gains in home values should minimize mortgage defaults, Cutts predicts.
According to the report, the total amount of first mortgage balances has increased 2.8 percent since the same time last year — up to $7.97 trillion dollars. That is the largest year-over-year increase in 48 months, and the highest total first mortgage balance since December of 2011.The report also states that the year-over-year balance of first mortgages rose for three consecutive months — a trend that hasn’t occurred for four years.
As the statistics in the report indicate, the mortgage industry is gaining solid footing as the economy improves. There are positive indications that this trend will continue at least through the summer of 2014.
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