Foreclosure Rates Continue to Rise

Homeowners in the United States continue to lose their homes at record rates.  The Mortgage Bankers Association recently released figures that showed roughly 9% of all homes in the United States are either in foreclosure or are seriously delinquent in their payments.  This should be no surprise when viewed with the latest unemployment rates issued by the Department of Labor.  The unemployment rate is now 6.1%.  Overall the Misery Index stands at 11.3% and surely will increase.

The analysis of the Mortgage Bankers Association shows that 2.75 percent of all homes are in foreclosure and 6.41 percent are more than 30 days past due.  By comparison, during the darkest days of the depression, the rates of foreclosures and delinquencies reached 12%.  The tie between homeownership and the unemployment rate might not be so easy to see, but it is easily explained.

When homeowners lose their homes to foreclosure or become delinquent due to increasing payments, resources are placed towards preventing the loss or fidning a substitute place to live.  Homeowners in stress so not buy durable consumers goods.  They don’t have the money.  So sales of new cars, TVs, and furniture drop.  The first cutbacks come on the retail level as stores cut back on staff and then ultimately cut back on orders for new goods to sell.  With decreased orders, factories and related industries like shipping or parts production cut back on their workforce.  The unemployment rate rises, dropping incomes and resulting in more missed payments.  If left to continue for too long, the cycle becomes harder to break.

Related posts:

1. Foreclosures Continue to Rise, But Some Areas Are Eerily Calm
2. Re-Default Rates Continue to Plague Mortgage Industry
3. New York City Foreclosure Rates Rise, Still Lagging Behind The Nation