The national unemployment rate rose to 8.1 percent in February, the highest the stat has reached in a quarter century. The ""Bureau of Labor Statistics"":http://www.bls.gov/news.release/empsit.nr0.htm reported on Friday that 651,000 workers lost their jobs last month.
According to the ""Mortgage Bankers Association's"":http://www.mortgagebankers.org (MBA's) chief economist, Jay Brinkmann, the new jobless numbers are a strong indicator of what the mortgage industry can expect in terms of delinquencies to come.
In a media call on Thursday discussing MBA's mortgage delinquency study for 2008, Brinkmann explained that unemployment is already clearly impacting the delinquency rate of subprime fixed loans. And he said, he expects employment status and economic factors to also begin triggering defaults on prime fixed mortgages.
Brinkmann said as layoffs of college-degreed, technically-trained, and Wall Street professionals rise, we can expect parallel increases in mortgage delinquencies for certain states heavily-laden with hi-tech and financial businesses. As unemployment spreads, he said, so too will past due mortgages.
Typically, Brinkmann said, three major issues can be identified with the housing crisis: loan structure, underwriting/fraud, and overbuilding. But now, he argues, we've got a deteriorating jobs market issue to deal with as well. Despite industry- and government-led efforts to promote and preserve homeownership in the United States, Brinkmann says real recovery in the housing market will depend on when jobs come back.
The normal recessional progression, Brinkmann says, is the economy begins to slow, followed by a loss of jobs, followed by increases in mortgage delinquencies. Therefore, he contends, improvements in delinquency rates will follow improvements in job markets, which are not expected until mid to late 2010.
Despite the elevated figures released on Friday, the _""Associated Press"":http://www.ap.org_ reported that the number of new jobless claims and the total number of people receiving unemployment benefits were both lower than analysts were expecting.
Still, Joseph Brusuelas with Moody’s Economy.com told the _""New York Times"":http://www.nytimes.com_, ""Given the continuing slide in economic activity in the first quarter of 2009 there is a strong probability that over the next three months we will see a slow bleed in employment as the retail, financial, and business services sector of the economy continue to shed jobs.""
Joshua Shapiro, MFR Inc., points out that since the recession began in December 2007, the country has lost 4.38 million jobs, with 75 percent of the drop occurring in the last six months, the _Times _said. And David Greenlaw and Ted Wieseman with Morgan Stanley told the paper that they expect the unemployment rate to approach 10 percent by the end of 2009.