This is largely due to a combination of improved economic conditions, increased access to credit, and better lending practices among banks and mortgage lenders.
In the past, people who had poor credit or limited financial resources were generally unable to qualify for a mortgage loan, leading to higher foreclosure rates. Banks adopted stricter standards for underwriting mortgages and borrowers began to be more financially responsible during the boom years of the mid-2000s. As a result, foreclosure rates began to decline.
More recently, the mortgage industry has seen another shift in the average American’s financial behavior. Consumers are taking out fewer loans for large purchases such as cars and homes and opting instead to rent properties or finance smaller purchases. This has given banks and other lenders more confidence in their ability to successfully collect payments from borrowers.
Furthermore, the number of people who are unable to make their mortgage payments on time has fallen dramatically since the Great Recession ended in 2009. The number of foreclosures initiated by banks each year has fallen to its lowest point since the early 2000s while the delinquency rate for mortgage loans has also reached its lowest level since the mid 1990s.
These factors have contributed to a healthier housing market. Home values have risen significantly, and more Americans are able to secure financing for their dream home. In addition, the decrease in foreclosures has resulted in fewer vacant homes across the country. This has had positive effects on local economies, as the increased demand for rental properties has added jobs, stimulated local development, and provided additional tax revenue for governments.
Overall, the mortgage industry has seen significant improvements in both mortgage delinquency and foreclosure rates in recent years. Improved economic conditions, increased access to credit, and improved lending practices have allowed more people to obtain financing for a home. Combined with consumers’ increased responsibility with borrowing, this has led to a healthier housing market and more affordable housing options for many.
This article was contributed on Oct 21, 2023