Worrying times for homeowners

12.02.08
By James Dunsford

It's hard for many homeowners right now. The economy is taking a battering, credit is being squeezed on all sides and the threat of foreclosure looms ominously over an increasing number.

This trend appears to be borne out by the latest delinquency figures from credit reporting agency TransUnion, which reports a rise of more than 50 percent in mortgage accounts overdue by two months or more.

According to the agency, almost 4 percent of mortgage holders were 60 days or more in arrears compared with 2.5 percent the previous year.

Ezra Becker of TransUnion described the increase as "nothing short of staggering," and warned the rate of increase was unlikely to slow.
"Our projections are that it's not only going to be increasing but it's increasing at a faster pace," he said, according to the Associated Press.

Growing levels of unemployment were aggravating the extent of mortgage arrears, which could move past 4.5 percent in the final quarter of the year, Becker warned.

And the problem seems set to get worse before it gets better. Delinquency rates are predicted to rise steadily through 2009, passing 7 percent by the end of the year.

A further problem has been the number of borrowers reaching the end of their adjustable-rate mortgage loans, coming off good home loan terms secured several years ago when lenders were more relaxed in their approach and keen to attract new customers.

The latest figures come as experts advise homeowners to pay close attention to their FICO - the measure used by lenders when assessing your credit rating. The higher your FICO score, the better the chances of you snagging a low mortgage loan deal for your property.

Foreclosure rates have been most marked in states such as California, Arizona, Nevada and Ohio which have experienced a rush to develop new residential sites in recent years.

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Homeowners under increasing pressure as deliquency rates rise