The amount of borrowers struggling to keep up with their mortgage payments has been predicted to decrease by the end of 2012, so long as the US economy doesn’t experience any more hiccups, according to the Associated Press.
Mortgage delinquency rates, which are used to illustrate the ratio of borrowers that are more than 60 days behind on their mortgage rates, are expected to improve by the end of next year. TransUnion, the credit reporting agency, said that while the rates may rise slightly to 6% at the beginning of the year, by next winter they should drop down to around 5%. That would be a big improvement on the 6.89% of borrowers who were delinquent at the end of 2009.
TransUnion gave a number of reasons for the expected improvement, including better employment prospects and a more stable housing market which are both predicted for the new year. They also pointed out that the robo-signing scandal, which saw bank officials signing off documents without bothering to verify any information in them, resulted in delinquency rates being boosted. Banks had to go back and review foreclosures more thoroughly, meaning that many mortgages which would have been foreclosed were instead left in a delinquent state for longer. Now that this backlog is largely cleared, rates are expected to drop.
Still, Associated Press reports that while the 5% mortgage delinquency rate being forecast is a big improvement, this rate is still some way ahead of the 1.5% to 2% average seen before the recession took hold.
Steven Chaouki, vice president of TransUnion, told Associated Press that while things are looking up, there’s still a “long way to go” before we get back to pre-recession levels.