Mortgage Delinquencies Slide

The Mortgage Bankers Association reported that the mortgage delinquency rate for residential properties of as many as four units decreased to 8.2 percent as of the end of the fourth quarter of 2010. That's a decrease of nearly a percentage point--91 basis points--from the third quarter of 2010, and a decrease of 125 basis points from the fourth quarter of 2009.

February 18, 2011
Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user chrisdlugosz

The Mortgage Bankers Association reported that the mortgage delinquency rate for residential properties of as many as four units decreased to 8.2 percent as of the end of the fourth quarter of 2010. That’s a decrease of nearly a percentage point–91 basis points–from the third quarter of 2010, and a decrease of 125 basis points from the fourth quarter of 2009. The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure.

The serious (sheriff-at-your-door) delinquency rate, meaning the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.57 percent, a decrease of 13 basis points from last quarter, and a decrease of 110 basis points from the fourth quarter of last year. Foreclosures themselves were up a bit quarter-to-quarter, said the MBA. The percentage of loans actually in the foreclosure process at the end of the fourth quarter of 2010 was 4.63 percent, up 24 basis points from the third quarter, but only up a scant five basis points from one year ago.

“These latest delinquency numbers represent significant, across the board decreases in mortgage delinquency rates in the US,” Jay Brinkmann, MBA’s chief economist, said in statement. “Total delinquencies, which exclude loans in the process of foreclosure, are now at their lowest level since the end of 2008. Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession.”

The Farmland Bubble

What, another property bubble? Federal Reserve Bank of Kansas City President Thomas Hoenig, notable dissenter from many recent Fed policies, told the Senate Agriculture Committee on Thursday that farmland is the next big bubble, and that it will do the U.S. economy no good when it pops.

“My nagging concern remains that current distortions in financial markets are increasing the risk that imbalances in asset markets will catch agriculture–and the U.S. economy more generally–by surprise once again,” he told the committee, using central-banker-speak to describe a popping property bubble. He added that farmland prices in his district, which includes Kansas and Nebraska, are now 20 percent higher than this time last year (the Chicago Fed recently reported a year-over-year increase in Midwest farm valuations of 12 percent).

“This run-up in farmland values has occurred… amid financial markets characterized by high levels of liquidity and unusually low interest rates,” Hoenig continued said, citing the demon rum of easy money as the probable bubble-making force. “It is nearly impossible to determine how much of the farmland boom may be an unsustainable bubble… and how much results from fundamental changes in demand and supply conditions.”

E-Commerce Sales Spike in the Fourth Quarter of 2010

The U.S. Department of Commerce reported that e-commerce sales were considerably up in the fourth quarter 2010 compared with the same quarter in 2009–$44 billion vs. $38 billion. Total sales on line for all of 2010 were $165 billion.

As a total of all retail sales, that’s still a relatively small number, accounting for about 4.3 percent. Still, only 10 years ago–when online retailing was the next big thing–the entirety e-commerce accounted for only about 1 percent of all retail sales.

Wall Street was in fine fettle on Thursday, with the Dow Jones Industrial Average gaining a meaty 91.5 points, or 0.75 percent. The S&P 500 advanced 0.31 percent and the Nasdaq was up 0.21 percent.