Late mortgage payments reach three year low
A rainbow is seen in the distance behind a real estate sign July 27, 2012, in a community of townhomes in Centreville, Va.
Today the credit rating agency Trans Union said late payments on mortgages have reached the lowest level in three years. About 5.5 percent are still paying late -- by two months or more -- but that's the best since the beginning of 2009, just after the recession hit.
Mark Zandi, chief economist at Moody's Analytics, says this is good news because it means fewer homeowners are getting into trouble in the first place.
"The best news is that the number of loans that are in what's called early delinquency -- 30 day delinquent, 60 day delinquent, even 90 day delinquent -- has fallen very sharply," Zandi points out. "So that means in the future there will be fewer foreclosures, so we're moving in the right direction."
In addition, the data research firm Core Logic found that housing prices were up last quarter. The mortgage giant Freddie Mac came out with similar results when it comes to housing prices, saying that it is the biggest jump in prices since 2004.
Jeremy Hobson: Now to some new encouraging signs for the housing market. Today the credit rating agency Trans Union said late payments on mortgages have reached the lowest level in three years.
Marketplace's Eve Troeh joins us from Los Angeles with more. Good morning.
Eve Troeh: Good morning.
Hobson: So, Eve, more people paying their mortgage on time and in full?
Troeh: That's right, that seems to be the case. Trans Union says we have the lowest rate of late payments in three years. Now, about 5.5 percent paying late -- by two months or more -- but that's the best since the beginning of 2009, just after the recession hit. So, that presumably means that more people keeping their homes -- that fewer homes going back to the bank, and then end up on the market as foreclosures.
Hobson: Of course a lot of people recently have been saying that the housing market has hit bottom, and they're waiting to see some signs that prices are starting to go back up again. Do we have any evidence of that yet?
Troeh: "Bottom" is indeed a dangerous word, but a few data points today: the data research firm Core Logic found that prices went up last quarter, and so did Freddie Mac, the mortgage giant; they saw prices go up in this past quarter, too. How much? Core Logic said it was the biggest jump since 2005; Freddie Mac said the biggest jump since 2004. So that seems worth noting.
Now one explanation for the jump in home prices is that supply is actually down. That could be because many of these homes on the market are being snapped up by investors, not families who are going to live in them. And those investors, instead of selling them, are turning them into rentals.
Hobson: Well maybe that will do something to bring down those ever-rising rents in a lot of parts of the country. Marketplace's Eve Troeh, thanks so much.
Troeh: Thank you Jeremy.