The national delinquency rates on home is a number that may not be tracked diligently by real estate professionals. It isn’t as widely tracked as mortgage interest rates, average days to close and housing price fluctuations, but it may offer insight to the health of the American economy.
The Mortgage Bankers Association released the most recent national delinquency rate and it is lower than it’s been in 18 years. According to an article published by the Chicago Tribune, “That’s a big deal, because when large numbers of owners do the opposite – stop paying on their home loans for months at a time — the entire economy feels the effects. Spiking delinquencies in 2007-2008 ushered in the global financial crisis and spawned tidal waves of foreclosures that devastated borrowers and their communities.”
It sounds like it is some great news, but what has caused the number of delinquencies to drop? Perhaps, and most likely, we can thank the underwriting rules that were tightened up back in 2010. Specifically, mortgage lenders are requiring a high FICO score to qualify, avoiding approving mortgages to high risk borrowers more likely to default. These changes, coupled with continued low rates, a healthy economy and a drop in unemployment are helping ensure more home owners stay on track with their payments.