There may be more investors and consumers alike who are looking to make a purchase in the residential market, as some measurements are starting to show signs of recovery.
Overall mortgage delinquencies dropped to a rate of 6.11 percent during the first quarter, according to the National Delinquency Survey from the Mortgage Bankers Association. This level was 114 basis points lower than the same quarter in 2013, as well as 28 basis points lower than one quarter earlier.
Foreclosures also continued to become less of a factor in the market during the first quarter. The report showed that the overall foreclosure action level dropped to 0.45 percent at the end of the quarter, notably lower than the previous level of 0.54 percent.
"We are seeing sustained and significant improvement in overall mortgage performance," said Mike Fratantoni, chief economist at MBA. "A more stable and stronger job market, coupled with strong credit standards on new loans, has kept delinquency rates on recent vintages low, while the portfolio of loans made pre-crisis is steadily being resolved. Increasing home prices, caused by tight inventories of homes for sale, have helped build an equity cushion for many new borrowers and have helped some homeowners who had been underwater regain positive equity in their properties. The increase in values also helps to facilitate sales of distressed properties, which may further expedite the pace of resolution of pre-crisis loans."
Mortgage rates remain low in mid-May
While loan health showed significant improvement during the early part of the year, affordability may be another factor that attracts Americans to the housing market. According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage fell to an average of 4.2 percent during the week ending May 15, a slight decline from the previous level of 4.21 percent.
"Mortgage rates were little changed amid a week of light economic reports," said Frank Nothaft, vice president and chief economist at Freddie Mac. "These lower than expected rates are welcome news with the spring home buying season underway and may even provide those who haven't already refinanced possibly a reason to take another look. Of the few releases, advanced retail sales rose 0.1 percent in April, but below the market forecast consensus of a 0.4 percent increase."
The 15-year FRM also had a marginal drop in its average, as it posted a figure of 3.29 percent, the report added. One week earlier, it averaged 3.32 percent.