More Americans are at risk of losing their homes this year compared to 2023, according to new mortgage data from Intercontinental Exchange.
While the delinquency rate fell in August, it’s still 5 percentage points higher than last year, suggesting that even more Americans could struggle to make their mortgage payments in 2024.
The national delinquency rate fell 3 basis points last month to 3.34 percent, down 0.9 percentage points from July, and the number of borrowers who are late on one payment fell by 26,000, but the number of borrowers who are 60 days or more delinquent increased by 1,000, the report found.
“Foreclosure rates remain below pre-pandemic levels, but serious delinquencies are up slightly,” Kevin Thompson, financial expert and founder and CEO of 9i Capital Group, told Newsweek.
“This can be attributed to higher mortgage payments. For many Americans, the increased costs of insurance and property taxes are causing the total payment to be higher than expected.”
There was also bad news on serious delinquencies: That figure, which includes loans that are 90 days or more past due but not in foreclosure, rose by 14,000 to a six-month high.
“Because mortgage payments take up a large portion of a household’s finances, mortgage delinquency can be a visible sign of financial hardship and stress for consumers,” Daniel Hale, chief economist at Realtor.com, told Newsweek. “Fortunately, the data shows positive month-to-month trends, with both delinquency rates and foreclosure starts declining. However, year-to-year trends are mixed, with delinquencies increasing and foreclosure starts decreasing.”
Foreclosure starts are down 9 percent from July. But foreclosure starts are still 32 percent below 2019 levels.
“While the slight year-over-year increase is nothing to cheer about, it’s not as worrisome a sign as some may think,” Alex Bean, a financial literacy lecturer at the University of Tennessee at Martin, told Newsweek. “While rising delinquency and foreclosure rates are bad news, both rates remain strong when considered against historical averages.”
Title and escrow expert Alan Chan said the current figures reflected market conditions returning to normal.
“There are still millions of homeowners out there enjoying historically low interest rates,” Chang told Newsweek. “These low rates lower monthly mortgage payments, making homebuying more affordable and delaying potential defaults.”
The burden of buying a home remains a sticking point for many Americans, and those who already have a mortgage are still feeling the strain.
Mortgage interest rates have fallen recently, but people who signed up when rates were higher could face financial difficulties.
Still, Redfin said the median mortgage payment fell 2.7% year over year to $2,534 in September.
Even with these improved interest rates, the typical household still earns 27% less than what it needs to buy a home, and the median home price is up 5.4% from a year ago to $398,475, according to Redfin research.
“The housing market remains relatively sluggish, primarily because many homeowners are stuck with low-interest mortgages and are hesitant to sell,” Thompson said. “The Fed is trying to free up some of the housing inventory by adjusting policy, which could bring more homes onto the market and, ideally, drive down prices.”
According to the National Association of Realtors (NAR), sales of existing homes fell 2.5% from July to August due to rising home prices.
This represents a 4.2 percent decrease from August 2022.
Housing inventory is also increasing, rising 0.7 percent from July to August to 1.35 million homes on the market.
Experts say an increase in foreclosures could push home prices down slightly, but the housing market tends to be slow-moving.
“Each individual needs to crunch the numbers and decide whether renting or buying is the best option for them,” Chan previously said. “There is no one-size-fits-all magic solution.”
A “For Sale” sign hangs outside a home for sale in Los Angeles, California, on August 16, 2024. New mortgage data suggests more Americans could be at risk of losing their homes this year. Details: PATRICK T. FALLON/AFP via Getty Images
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