Although figures regarding the current state of mortgages in 2013 are minimal, information from the fourth quarter of 2012 positions this year as more auspicious and another step toward better recovery for the housing market.
According to a TransUnion report, the delinquency rate is down, hitting a low of just 5.19 percent in Q4. This is a significant decrease to the last quarter of 2011, which saw delinquencies at 6.01 percent.
The report goes onto state that 37 states and the District of Columbia saw improvements, with major metropolitan areas experiencing decreases. Nevertheless, it points out that while delinquencies are gradually lessening, the rate is expected to remain above five percent throughout the year. Changes to the foreclosure process could additionally alter delinquency figures.
Keeping delinquencies this high, TransUnion explains, are older vintage loans, as opposed to newer mortgages. Often, borrowers attached to such programs have a longer history of not making payments.
Also for the fourth quarter of 2012, Freddie Mac, according to a recent report, found that 27 percent of borrowers refinancing existing mortgages decided on shorter terms. As Freddie Mac points out, borrowers deciding to shorten the term could obtain lower rates.
Out of all refinancing, the majority (95 percent) preferred fixed rate loans, regardless of whether the original mortgage was adjustable or fixed rate. 83 percent of former ARM borrowers went with a fixed-rate loan upon refinancing.
Most refinancing borrowers, however, stuck with the same term (69 percent), with just four percent selecting a longer option. HARP, or the Home Affordable Refinance Program, influenced refinancers; through the program, these borrowers (about 95 percent) gravitated more toward fixed-rate, long-term mortgages.
The average home price additionally influenced fourth quarter refinancing decisions. Those in lower-priced metropolitan areas tended to refinance to shorter terms than those in higher-priced markets.