Data from the second quarter indicates that mortgage delinquencies hit a record of 9%.
“The share of loans with one or more payments overdue rose to a seasonally adjusted 9.24 percent of all mortgages, an all-time high, from 9.12 percent in the first quarter, the Mortgage Bankers Association said in a report today,” reports Kathleen Howley of Bloomberg.
Job losses and falling prices mean homeowners can’t pay their mortgages and can’t sell their homes.
And these homeowners aren’t just the subprime participants either.
As reported by CNNMoney, Jay Brinkmann, chief economist for the Mortgage Bankers Association said in a prepared statement, “There was a major drop in foreclosures on subprime ARM loans. The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase.”
The Associated Press and Yahoo Finance report, “One in three new foreclosures between April and June was from a prime, fixed-rate loan, up from one in five a year earlier. Last year, subprime adjustable-rate loans caused the largest share of foreclosures.”
That’s because jobless claims are still climbing. They jumped to 576,000 last week.
At the same time, mortgage rates are falling.
MarketWatch reports that they are at their lowest rates since May.
A 30-year fixed-rate mortgage averaged 5.12% this week, down from 5.29% last week. And the 15-year fixed rate dropped to 4.56% from 4.68%.
This means that more buyers might be entering the market.
“According to a separate survey from the Mortgage Bankers Association, mortgage applications rose during the week ending Aug. 14, compared with the week before. The MBA survey also reported that rates fell last week,” reported Amy Hoak from MarketWatch.
But President Obama’s “Making Home Affordable” program designed to prevent foreclosures isn’t garnering as much attention as expected.
In fact, only about one in 10 eligible borrowers has signed up since July, according to the Associated Press.
Adam Lass, editor of WaveStrength Options Weekly, thinks that Washington has a trick up its sleeves, though. He thinks that the administration could manufacture a real estate boom.
He writes, “They can do what they know works: drive up the real estate market by keeping mortgage rates at historic lows, rehabbing Fannie Mae and Freddie Mac, and taking foreclosures off the market. This will make everyone look a little richer (at least on paper).”
And rates are at historic lows… The housing market has seen applications climb, and single-family housing starts have risen for the past five months…
“Best part of a real estate boom so far as Washington is concerned,” Adam says, “is the taxes come in whether you sell your house or not. All it takes is a couple of good sales in your neighborhood, and most everyone else can start refinancing again. And that rising tide is good for states and municipalities too, ’cause they can raise tax assessments across the board.”
It’s a “hold your nose and buy” kind of industry when the government gets involved.
Adam has just released his latest way to play the housing market in WaveStrength Options Weekly. You can read his alert by becoming a member.
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