THOUGH some economists are concerned about American homeowners' rising debt burdens - especially in high-cost, high-inflation markets - a new study suggests that those worries may be misplaced: Homeowners in so-called "bubble" markets such as California, Nevada, New England, Florida, the Mid-Atlantic and the District of Columbia are more likely to pay their mortgages on time than homeowners in parts of the country with lower housing inflation rates.
In California for example, where house prices have ballooned at double-digit rates for five years, just 2.04 percent of mortgage borrowers were behind on their payments in the final quarter of 2004, according to new loan delinquency data compiled by the Mortgage Bankers Association. The national average during the same period was 4.6 percent.
In Texas, by contrast, where prices and inflation rates have been much lower, 6.8 percent of homeowners were behind on their loan payments. In Mississippi, 8.8 percent of owners were delinquent. In Louisiana, 7.2 percent paid late.
In high-priced Massachusetts, where aggregate housing price inflation has led the nation over a 20-year period, 3.2 percent of homeowners were delinquent. In the District of Columbia, where home prices have been high for years and rose by another 23 percent last year, 3.7 percent of borrowers paid their mortgages late. Delinquency rates in high-cost New York, New Jersey and Florida were about 4 percent, well below the national average, while rates in Georgia (6.3 percent), Tennessee (6.4 percent) and West Virginia (6.6 percent) were considerably higher.
The new national delinquency and foreclosure figures, which cover payment performances on nearly 39 million outstanding mortgages, also documented wide variances among credit categories of homeowners and the types of loans they obtain.
For example, if you are what the mortgage industry classifies as a "prime" borrower - you have a solid credit history and you qualify for the best rates available - you are far more likely to pay your loan on time than "sub-prime" borrowers, no matter where you live.
Nationwide at the end of last year, according to the mortgage bankers' delinquency study, just 2.4 percent of all prime mortgage borrowers were behind on their payments, compared with nearly 11 percent of sub-prime borrowers with less favorable credit histories and scores. Sub-prime borrowers were 7 1/2 times more likely to be 90 days delinquent than prime borrowers, and eight times more likely to be in foreclosure proceedings.
