Mortgage delinquencies rates rise
The real estate market may be set to improve in 2007 from its recent downward trend, but it may not be soon enough for many homeowners struggling with their mortgages. In the third quarter, late payments and foreclosures rose, with the largest impact being felt in the adjustable subprime arena.
According to the quarterly National Delinquency Survey, the mortgage delinquency rate rose to 4.67% in the third quarter. This was up from 4.39% in the prior quarter and 4.44% in the third quarter of last year. The hardest hit area was the subprime market. While it only accounts for 7% of all home loans, 12% of those loans were delinquent.
Those rates may rise even further if the predictions of the Mortgage Bankers Association regarding mortgage rates are correct. They are forecasting that in 2007, between $1.1 trillion and $1.5 trillion of mortgages face rates will reset. Up to $700 billion of those loans will be refinanced, while up to $800 billion will adjust at less affordable rates. For may subprime borrowers lured in by attractive teaser rates, this could spell trouble as they continue to struggle with rising mortgage payments.