The final quarter of 2007 was a bleak one in the housing market, as foreclosures and delinquency rates reached record highs. The fourth quarter, from October to December, found foreclosures rising to 0.83 percent, passing the previous high of 0.78 percent set in 2007's third quarter, adding to the economic woes the U.S. is suffering, mostly onset from problems arising in the housing sector.
The data, from the Mortgage Bankers Association's quarterly report released this month, said that the delinquency rate -- the rate of those more than 30 days past due on their latest mortgage payment -- also climbed to a record high of 5.82 percent in the fourth quarter, up from 5.59 in the third quarter to reach the highest point since 1985.
The subprime mortgage mess continued to snowball, as the percentage of adjustable-rate mortgages entering foreclosure rose to 5.29 percent in the fourth quarter, and delinquencies rose to record-high 20.02 percent among subprime borrowers, up from 18.81 the previous quarter.
The MBA information includes data on 46 million home loans across the country, and suggests that the U.S., which many say is teetering on the brink of the first recession since 2001, is headed in that direction. The continuing wave of foreclosures will only add to the woes in the real estate market, as banks and lenders overtake the homes that delinquent borrowers are forced from, adding to the already large supply of houses on the market.
As the glut of homes continues to rise and the price values of homes continue to fall, the domino effect takes shape, as builders hold off on constructing new homes, driving down the amount of materials they buy. With the shape the market is in, it's also difficult for those looking for homes to get approved for the financing to get a new house, as lenders have pulled back and become more choosy about whom they'll lend to. The Federal Reserve's chairman, Ben Bernanke, has warned that the country may not have seen the worst of the mess yet, and cautions that the number of foreclosures and late payments could yet rise again.