Today's Record Lowest Mortgage Rates Too Late for Many
Freddie Mac's announcement July 1, 2010 that we had, for the second week running, the lowest mortgage rates in 50 years must have raised a cheer over many a breakfast table. During tough economic times, any opportunity to save serious money each month through a home refinance must be welcome.
However, for very nearly one in eight American homeowners, the news came too late. Their mortgage payments are already overdue or their homes are in foreclosure. And right now their chances of refinancing are close to zero.
Mortgage Loan Misery: The Details
That one-in-eight figure (May 2010 data), comes from Lender Processing Services (LPS), a company that specializes in mortgage performance data and analytics. To be precise, the data, published July 6, say that 12.38 percent of U.S. mortgages (that's 7.3 million) are delinquent or in foreclosure. Those states suffering most include Florida, Nevada, Mississippi, and Georgia, while those with the fewest non-current home loans include North Dakota, South Dakota, Wyoming, and Alaska.
Unfortunately, there are few signs that this is the tail end of a destructive trend. Indeed, LPS says that, in May, deterioration rates actually increased, and that for every mortgage that came back on track, 2.5 rolled into a status that was worse than its previous one.
When the Wall Street Journal covered this story, it underlined that point: "The numbers raise questions about how enduring the improvement in mortgage delinquencies earlier this year will prove to be, particularly because delinquencies typically improve during February and March."
Other Housing Market Problems to Come?
The LPS report, which was consistent in its grimness, highlighted more possible problems for the housing market down the line. It says that the average time it takes for a mortgage to go from 30-days delinquent to foreclosure sale has stretched to a record-breaking 449 days.
That may be good news for the poor householder who--possibly through unemployment or illness--has fallen behind with payments. But it may not be as welcome for everyone else. It means that large numbers of homes are getting into a very long queue to reach the market (LPS calls it a "shadow foreclosure inventory"), and when they're finally put up for sale they may further dampen house prices. And that could spell more underwater mortgages.
If you're one of the lucky--or prudent--people who've maintained a respectable credit score, you could take advantage of today's record lowest mortgage rates by finding yourself a great home refinance deal. Get a competitive quote here.