More Consumers Missing Mortgage Payments

Mortgage delinquencies continued to rise in February, despite a number of other encouraging signs for the U.S. housing market, an indication that the ongoing recession has yet to hit bottom.

Seven percent of all U.S. mortgage holders were at least 30 days late on their mortgages in February, according to Dann Adams, president of U.S. Information Systems for the credit reporting firm Equifax, Inc. The figure is more than double that of one year before.

Nearly four out of 10 subprime borrowers were reported delinquent, Adams said, up nearly 25 percent from February 2008.

The news comes on the heels of figures from the Labor Department that 663,000 Americans lost their jobs in March, raising the U.S. unemployment level to 8.5 percent, the highest level in more than 25 years.

"I'm trying to find optimism in these numbers, but I'm pretty hard pressed to do that," Adams told Reuters News Service. He said the increase in mortgage delinquencies suggests that housing prices will continue to fall as more homeowners go into foreclosure and banks repossess their homes.

Banks closing credit cards

Banks are also cutting back on credit card lending, according to Equifax, closing 8 million credit card accounts in February. The reduction trims the number of active cards to 400 million, down from a high of 483 million in July 2008. The tightening credit comes at the same time that many financially stressed consumers are turning to their credit cards to meet monthly expenses. "Limits are falling because lenders are trying to minimize their losses," Adams said.

Equifax reported that credit card delinquencies are also on the rise, with 4.5 percent of all balances at least 60 days past due in February, up nearly a third from a year before.

Small signs of hope

Despite the rising mortgage delinquency and unemployment rates, there has been some good news in the housing market lately. Sales of both new and existing homes rose approximately five percent in February, with about half of the latter bought by first-time owners. The average home sale price rose as well, to $251,000, up from $239,000 a month earlier, according to the Commerce Department.

Even so, the numbers remain relatively weak when compared to one year earlier. New home sales in February totaled 337,000, down from 578,000 in February 2008, a decline of more than 40 percent. Likewise, the average February sale price is down nearly 17 percent from one year before, when it stood at 301,000.