Americans are beginning to gain ground against the worst recession in recent history as more and more economic indicators point to recovery. A new study from the Federal Reserve says household net worth in the U.S. soared $2.1 trillion during the last three months of 2010.
From October through December of last year, the central bank says household losses on real estate assets totaled $260 billion as property values continued to sink, but that was dwarfed by a $2.3 trillion surge in the value of financial assets resulting from strong stock markets gains.
Gregory Daco, U.S. senior economist for the research firm IHS Global Insight broke down the numbers from the Fed's Q4 _Flow of Funds_ report in a research note released to DSNews.com.
Daco explained that household liabilities rose just 0.2 percent during the fourth quarter of 2010 as consumers took on more installment debt but continued to pay down existing mortgages. Outstanding mortgage debt fell by 0.3 percent.
""Overall private finances are improving as employment rises and lending conditions loosen, but housing remains a drag,"" Daco said.
Still, the latest figures are a good sign for the mortgage market as it struggles to get a handle on delinquency numbers in the millions. The increased net worth should translate into stronger household finances and fewer homeowners who are unable to meet their mortgage obligations.
Market analysis from the Mortgage Bankers Association (MBA) does indeed point to a decline in new delinquencies in recent months.
MBA reported last month that the overall delinquency rate for single-family mortgage loans dropped to 8.22 percent at the end of 2010, as the numbers fell in all past-due buckets.
Mortgages only one payment late Ã¢â‚¬" 3.25 percent of all outstanding home loans Ã¢â‚¬" have now fallen to the pre-recession levels of late 2007, according to MBA.