Mortgage Delinquency and Heating Costs
The Mortgage Bankers Assocaiton just released a report that address mortgage delinquen
cy rates and heating costs.
From the report:
“The continued high levels of energy prices are one of several factors that are applying upward pressure on mortgage delinquency rates. MBA’s National Delinquency Survey as well as data on energy price trends, and reviews factors that influence this relationship.
Why should energy prices impact mortgage delinquencies? In the wintertime, conventional wisdom indicates that homeowners are more likely to skip their mortgage payment if they have to in order to pay the heating bill. Recognizing that the winter of 2005–2006 was quite mild, spending for fuels for transportation and for home heating has represented a diminishing but still significant share of consumer expenditures over time.”
Conclusions from the report:
- The primary factors impacting delinquency rates are the state of the labor market, interest rates, and other factors reflecting the national and regional economies.
- Higher energy prices typically result in upward pressure on delinquency rates, but the impact varies considerably across regions, as the relative usage of different types of heating fuels varies by region.
- There is some evidence that spikes in natural gas prices have a non-linear effect on delinquency rates.