Home finance write-offs hit new lows
Posted on Tuesday, July 2, 2013 at 9:05:13 AM
Home finance write-offs reached a five-year low in May, hitting $69.7 billion. The decrease signals a stabilization of the housing market, with lower mortgage rates and less loan delinquency.
A recent Equifax National Consumer Credit Trends report stated that residential financing write-offs through the month of May 2013 decreased by 23 percent from the May 2012 total of $90.8 billion. The change is a drastic drop, and it looks even greater when compared to the recent high of $126 billion, reached in the beginning of 2010.
The positive trend has been created by the surge of the market, with a revitalization that has been several years in the making, according to a report by USA Today. Home prices are on the rise, up 12.2 percent from May 2012. In addition, lower mortgage rates and and decrease in unemployment have made residential financing more affordable for many Americans.
"Improving payment behavior and decreasing delinquencies has brought some stability to the home-finance sector," said Amy Crews-Cutts, Equifax chief economist. "Rising home values are bringing more and more borrowers into positive equity and decreasing the likelihood that they will fall into trouble."
First mortgage delinquency rates are now 22 percent lower, and home equity revolving delinquencies reached 2.67 percent, down from 3.43 percent.
"Low mortgage rates, though recently rising to a two-year high of 4 percent on 30-year fixed-rate mortgages, have supported strong refinance activity and pushed homebuyer affordability to new highs," Crews-Cutts said.