How Increased Mortgage Delinquencies Could Equate to Higher Home Loan Rates

It should come as no surprise to anyone that the housing industry is still trying to claw its way back to the health that it had just a decade ago. Subprime loans and individuals who could not afford the loans that they received led to a flood of foreclosed homes entering the market, causing housing values to plummet. This had a detrimental effect not only on the housing industry, but the overall economy at large. While things have definitely gotten better over the last few years, there is still quite a bit of room for improvement and the fact that there are still a large number of home loan delinquencies is likely to affect mortgage rates overall.

Seeing Improvement In The Housing Market?

From September of 2012 the September of 2013, the number of delinquencies fell by a dramatic 12.3%. While this is good news, the number of foreclosed properties still available on the market is much higher than most industry experts feel is ideal. This could cause also inflate the cost of home buying loans as well.

While foreclosure inventory continues to decline, there are still 1.3 million homes with mortgage payments that are 90 days past due. The number of homes with mortgages that are 30 or more days past due is at 3.2 6 million.

Of course, it is important to keep in mind that higher mortgage rates will be affected by home loan delinquencies, but not every state will fill the impact the same. States that have a high percentage of loans that are not current, such as Florida, New York, Maine, New Jersey, and Mississippi, are likely to feel the greatest impact while states like Wyoming, Alaska, Montana, North Dakota, and South Dakota with the fewest number of loans that are not current will be less affected by home loan delinquencies.

Helpful Information for Home Buyers

Obviously, individuals who make a living helping people achieve their goals of homeownership are well aware of fluctuations in the market and how delinquencies will affect rates. Those people who are looking to purchase their first home may not have a clear understanding of exactly how this will affect them. Additionally, new rules that will go into effect as of January 1, 2014 will make it more difficult for some individuals to qualify for a home loan. What this means is that buyers need to be more educated now than at any point in the past when it comes to purchasing a home and understanding exactly what options are available to them in order to get the most favorable rates possible.

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