The financial standing of many Americans continued to improve in February, which could make it easier for many prospective homebuyers to qualify for a home loan when the time comes.
According to the Standard & Poor's/Experian Consumer Credit Default Indices, the consumer credit default rate decreased from 2.16 in January to 2.09 percent in February. Meanwhile, mortgage records show that the first mortgage default rate edged lower to 2.02 percent, while the second mortgage default rate from 1.3 percent in January to 1.2 percent last month.
"It seems that 2012 has begun on a positive note for the consumer," said S&P index committee chairman David M. Blitzer. "We appear to be resuming the downward trend in consumer default rates that began in the spring of 2009. With last month's release we reported that the second half of 2011 saw a rise in consumer defaults, led by four consecutive monthly increases in first mortgage default rates."
As a greater number of consumers are able to make their monthly mortgage payments, it could result in more available credit for prospective buyers to capitalize on affordable mortgage rates and low home prices.
The most recent Weekly Application Survey from the Mortgage Bankers Association indicated that the interest rate for a 30-year fixed-rate mortgage with a conforming loan balance rose to 4.19 percent during the week ending March 16. The previous week the rate average 4.06 percent. In addition, the interest rate for a 30-year FRM with a jumbo loan rose to 4.49 percent from 4.39 percent the previous week.
Meanwhile, the report noted that the average home loan size in February increased to $225,463, up from $216, 888 at the beginning of 2012. In addition, the average loan size of a refinance dipped to $222,046 from $227,563 the previous month.
"With the rate increase last week, refinances are obviously slowing, and the refinance share at 73 percent is down to its lowest level since last July," said MBA senior vice president of research and education Jay Brinkmann.
As lending conditions continue to improve across the country, it could result in a spike in buying activity during the course of 2012. Low mortgage rates, bargain home prices and a stable national median household income are making the prospect of owning a home much affordable.