(No Ratings Yet)
Loading ...Financial experts predict that falling home prices would adversely affect the economy and worsen the dip recession. At the same time, there was a mixed signal from the housing market. The data showed that number of foreclosures for sale declined in the second quarter compared to the first quarter of 2010 but at the same time, mortgage delinquencies surged, boding for a rise in foreclosures in the near future.
Home loans that were newly delinquent soared during the last two quarters and the MBA (Mortgage Banker’s Association) warned that this trend could dampen the decrease in foreclosures observed in the last quarter and in fact, bode for an increase in foreclosures. Property experts panicked about a rise in foreclosures even as unemployment rates soared and new home sales failed to garner good figures in spite of highly discounted mortgage rates.
Freddie Mac, the government sponsored mortgage giant also reported that average rate of interest available on a 30-year fixed rate loan decreased by 4.39%. The rising mortgage delinquencies were caused by soaring unemployment rates that were plaguing the economy. Experts pointed out that the future picture of employment figures was not rosy and implies a fresh round of foreclosures hitting the economy. Some of them blame the now elapsed tax credit program for home buyers that had provided some respite for loan modifications and reversing loan delinquencies for creating a vacuum now.
MBA said that newly delinquent mortgages slipped for 3 straight quarters behind a 3.7 % peak at the beginning of this year. The down ward trend continued and settled at 3.5% in June. The number of loans in danger of being foreclosed rose due to foreclosure moratoriums and trials of loan modification. The MBA says that such loans have piled up to a count of 4.5 million.
Experts fear that these loans would lead to a surplus in the supply of houses and would drive down prices further, a trend that had already picked up in many regions.
On the contrary, foreclosure processes fell by 1.23% in quarter one of this year which was because of reluctance of banks to flood the market with foreclosed properties that may drive down prices.
They also add that the industry is keenly watching the impact of Obama administration’s economic aid programs to several states. They insist that foreclosure declines would not lead to any major changes in the economy and also that rising unemployment rates would lead to a future wave of foreclosures.
