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Report: Mortgage Delinquencies Rise, But Improvement on the Horizon

Mortgage delinquencies rose to 6.62 percent in August, according to a report from ""CreditForecast.com,"":http://creditforecast.com/ supported by Moody's Analytics and Equifax. This is up from 6.54 percent in July.


Delinquencies for both first mortgages and home equity loans posted increases for the month, according to supplemental data provided by Moody's Analytics and Equifax.

The first-mortgage delinquency rate for the month was 6.85 percent, rising from 6.77 percent in July, and the home equity delinquency rate was 4.14 percent, up from 4.05 percent in July.

The CreditForecast.com report predicts conditions will improve later in the year with a return of economic growth.


In the meantime, ""high unemployment and a lack of income growth are taking a toll on household credit,"" according to the report.

Also hurting the housing market, according to the report, are insufficient numbers of loan originations. However, the analysts do see originations starting to increase in most segments, and new originations are reportedly of higher quality than those seen previously.

""As bad loans originated before the recession are removed from portfolios, through either the default process or amortization, the overall quality of loans outstanding is improving,"" the report states.

""The performance of recent vintages has improved dramatically relative to their predecessors, especially considering the weak economic environment,"" the report continued.

Overall, defaults, including bankruptcies, increased 6 basis points in August reaching 0.28 percent for the month.

""Although default rates remain high, early-stage delinquency rates suggest that they will improve,"" the report states.

Thirty-, 60- and 90-day delinquencies all remain below their rates last year.