WASHINGTON (8/11/14)--Seriously delinquent mortgages have dropped to their lowest number since 2008, a development that has coincided with continued improvements to the job market, which added more than 200,000 workers for the sixth straight month in July, according to statistics from the Labor Department (Bloomberg.com Aug. 7).
Mortgage delinquencies, or those more than 90 days behind in payments, or in the foreclosure process, sank to 4.8% of loans in the second quarter, more than a 1% decline year-over-year, according to the Mortgage Bankers Association (MBA).
The last time the mortgage delinquencies occupied so little of all U.S. mortgages was in 2008, when it stood at 4.5%.
Some analysts believe the improved labor market, which now posts a 6.2% unemployment rate, is helping strengthen the housing numbers.
"The stronger job market means fewer people are going delinquent at the beginning of the process," Michael Fratantoni, MBA chief economist, told Bloomberg. "The stronger housing market means if someone becomes delinquent, they're able to sell the home before late-stage delinquency or the loan goes in the foreclosure process."
In addition to the job-adds, unemployment claims fell below 300,000 earlier this month, according to government data, posting the fourth week of declines in the last five weeks as of Aug. 2 (Economy.com Aug. 7).
Continuing claims, or those who have filed for unemployment benefits for at least a second straight week, also fell by 24,000.
"Unemployment insurance claims suggest that the pace of layoffs has normalized and is back to what it was prior to the economy's weakening in 2007," said Marisa Di Natale, Moody's analyst (Economy.com). "Monthly job growth has been above 200,000 in eight of the past 10 months, and with these healthy gains has come a reduction in the unemployment rate of a full percentage point."