Foreclosure Rate Probably Won't Improve for Another Year

The Mortgage Bankers Association (MBA) released its latest National Delinquency Survey last Thursday. The seasonally adjusted delinquency rate for the first quarter of 2009 was 9.12%. That's the highest rate in the history of the MBA survey, going back to 1972.

The delinquency rate does not include loans that are in foreclosure. At the end of the first quarter, 3.85% of loans were in foreclosure. The combined first-quarter total of loans that were either delinquent or in foreclosure was 12.07%, which is also a record going back to 1972.

Here's an excerpt from the MBA press release:

"Looking forward, it does not appear the level of mortgage defaults will begin to fall until after the employment situation begins to improve. MBA’s forecast, a view now shared by the Federal Reserve and others, is that the unemployment rate will not hit its peak until mid-2010. Since changes in mortgage performance lag changes in the level of employment, it is unlikely we will see much of an improvement until after that."

Foreclosures have a major impact on the supply side of the housing market, as I've discussed in the past. My guess is that their impact will grow even larger in the next year.