The Mortgage Market is Beginning to Show Improvements

Economists have stated that the mortgage market is beginning to take a turn for the better, as fewer homeowners fell behind on their mortgages in the last three months of 2009. Although the reduction is slight – only a fraction of a percentage point – economists say this is a significant change for the better as the number of homes going in the direction of foreclosure has been reduced. Considering this hasn’t happened since 2006, it gives good reason to be optimistic about where the economy and housing market in general is starting to head.

“We are likely seeing the beginning of the end of an unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007, continued with the meltdown of the California and Florida housing markets due to overbuilding and the weak loan underwriting that supported that overbuilding, and culminated with a recession that saw 8.5 million people lose their jobs,” said Jay Brinkmann, the Mortgage Banker’s Association chief economist. The main reason for Brinkmann’s optimism was a decrease in the percentage of borrowers who had missed even one mortgage payment. That rate has fallen from 3.79% to 3.63%. Typically at the end of the year, the number of short-term mortgage delinquencies increases drastically due to Holiday expenses, heating bills and other seasonal items; so the three month drop at the end of 2009 is a solid indication that the end might possibly be in sight.

Another glimmer on the horizon is a decrease in the number of borrowers whose lenders began the foreclosure process on their loans. However,loans that are 90 or more days late now account for half of all delinquencies calculated by the Mortgage Banker’s Association, which is a record high and twice the category’s share of delinquencies from two years ago. Even with those two statistics in play, delinquencies in the early stages are beginning to stabilize, which is a concrete sign that housing market conditions are getting better, even if it is at a very slow pace.

Tina Fountain is the Broker Owner of Tina Fountain REALTORS, an Atlanta, Georgia real estate company. Visit tinafountain.com, the preferred source for Atlanta luxury homes for sale.