Numbers Count: Weekly mortgage data highlights

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Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.

The numbers: Default rates & rising rates

Young couple meeting with an older professional to discuss mortgageFor the first time since July 2014, the default rate on first mortgages fell in February — down 2 basis points to 1.00% from the previous month, according to the S&P/Experian Consumer Credit Default Indices released March 17, which gauges changes in consumer credit defaults on cards, auto loans and mortgages.

What counts: All eyes are on the future of mortgage rates. As David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, said, “A true test of consumer credit quality and the prospects for future default rates will come in the second half of 2015 by which time the Fed will most likely have begun to raise interest rates.”

Bank of the West’s Chief Economist Scott Anderson is forecasting 30-year, fixed-rate mortgage rates to rise to near 4.5% in the first quarter of 2016. This is not a huge increase from last week, when the average rate on a 30-year, fixed-rate mortgage was 3.99%, according to the Mortgage Bankers Association’s most recent rate survey.

Still, with the outlook for rates to rise later this year, I have two thoughts:

  • Homeowners with adjustable-rate first mortgages and those with home equity lines of credit with adjustable rates may want to prepare now for the possibility of rising rates. One place to start is with our financial calculators where you can check out how changes in mortgage rates affect monthly payments.
  • If you find yourself struggling to make payments on a mortgage or any other type of loan, contact your lender as soon as possible. Depending on the situation, most lenders have ways they can help borrowers facing financial difficulties. The key, however, for borrowers needing assistance is to talk to the lender early.

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