Home Repossessions up 11% in the USA in May
Repossessions! Home repossessions in the USA increased by 11% in May. Foreclosure filings (default notices and scheduled auctions as well as repossessions) were also up by 2.3% (148, 054) according to a report just published today by RealtyTrac.
A total of 38, 946 homes ended up getting repossessed last month. The number looks like it could be here to stay with the jitters in the market sending ripples through the economy because of lack of trust in whether or not the Federal Reserve will stick to its guns and lay off the gas on stimulus measures. Is this a sign of things to come part of our daily lives today? Are we back into repossessions?
The banks look like they have been sitting tight on these repossessions for the past few months waiting to see what the economy does, now it’s time to call them in and cash in on bad mortgages. First-time default notices also increased by 4% last month. That means that we are seeing an increase for sure.
Just back in March, repossessions fell to the lowest level that they had ever been for the past five years. That was a 21%-drop from March 2012. Has the Federal Reserve had an effect on those repossessions that are increasing today? Or is it because the rising prices in the market today man that banks are ready to off-load those foreclosures?
Falling behind on mortgage repayments at the moment and the number of repossessions could have an effect on the rising prices that we are seeing at the moment. Home prices increased on average nationwide by over 12%. That may slow down given the foreclosures and the repossessions.
Whatever happens though, analysts say that we are on target for about 500, 000 foreclosures this year and that will be a decrease on last year’s number of 670, 000. The trend is nationwide, but some states are worse-off than others. Florida is the worst hit, with a rate that is nearly triple the national average. One household in 302 received a foreclosure filing last month in Florida. The national average stands at one in 885 homes. New Jersey was badly hot too, seeing new foreclosures rise by 82% compared with a year ago. Nevada was almost the same at 81%.
But, there is also an increase in the number of mortgage applications and that’s even more surprising since mortgage rates (fixed 30-year) rose to 4.15% last week, which is the highest that they have been for two months. The hike in rates is due to the Federal Reserve’s wish to lay off the stimulus plans. Borrowing rates have been kept lower than they should be perhaps because the Federal Reserve has been buying into securities at the rate of $85 million per month. Both refinancing applications and purchase demands for homes increased by 5%. Refinancing was the major part of that activity however standing at 69% of that total.
The Federal Reserve has made statements that the economy looks like it is getting better. It's simple math. The economy gets better, the Federal reserve hangs up the stimuls plan behind the door on a peg. It may or may not get to see the light of day again. When the stimulus plan gets put away, the economy will be worried about whether or not it will be coming out again. That scenario has caused worry on the markets and its knock-on effect has been the off-loading of bad mortgages in the housing market. Will the trend continue? All depends on what the Federal Reserve decides to do in the next few months. In the meantime, it’s the people that are being kicked out of their homes.
Originally posted Home Reposessions up 11% in the USA in May
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