Foreclosures Likely to Increase in 2010
Foreclosures Likely to Increase in 2010:”
The US economy is on a tailspin what with unemployment reigning high. As people lose jobs, they are faltering on mortgage payments. Hence, foreclosures are at an all-time high. Experts say that next year the scenario would not be any better. Foreclosures are likely to increase all through 2010. Home prices, however, may stabilize in some regions. A primary factor is with unemployment at an-time high of 10 per cent, even people with sound credit history, will find it difficult to make mortgage payments. Delinquency levels will increase next year, experts point out.
According to September 30 figures, one in every home loans in the US is either into foreclosure or past due. It may be noted that 14.41 per cent of all loans are in various stages of foreclosure. This is the highest since 1972. In the first half of 2009, one in every 10 loans is in foreclosure. In fact, when this is compared to September figures, it is up by 13.16 per cent compared to the second half. The continuous rise in delinquencies suggests that it may be awhile before the home market recovers.
There are mixed signals though. The good news is that average home prices have become more stable. In areas like California, prices have begun to move up. The same can be seen in Orange and San Diego counties and San Francisco.
However, there is a negative side to the picture also. Loan applications have dropped for the last six weeks. This has happened despite interest rates remaining low. In fact, rates are pegged at 5 per cent on 30-year fixed loans. Experts say that is not the tricky loans but job loss which is the main reason behind the people’s lackadaisical attitude..
It may be noted that the foreclosure rates were the highest in four states of California, Nevada, Arizona and Florida. In fact, these four states accounted for 43 per cent of foreclosures in the third half of 2009. Here prime loans formed the maximum percentage of bad loans. These made up for 33 per cent of fresh foreclosures that happened in the last half of 2009. Last year, the figure was pegged at 21 per cent. It was the sub-prime loans that had been the major reason behind the crash in the housing industry. In California, defaults on prime mortgages are quite high — 4.62 per cent. A case in point is that of a lawyer who feels that he would lose his home soon if he did not get a job.
“
