In a sign the recent bouts of inflation, as well as the steady rise in interest rates are impacting the bottom line of homeowners, in the US, home foreclosure activity surged to the highest levels seen since the beginning of the pandemic.
According to a recently released report from the real estate data firm ATTOM, filings for foreclosure, including default notices, scheduled auctions, and bank repossessions, were up 28% in the third quarter, compared to the second quarter, reaching 124,539. That represents a 34% surge from one year prior, demonstrating that US homeowners are finding themselves under increasing levels of financial stress.
The most recent data cements the trend of a steady increase in foreclosure activity which has been occurring throughout 2023. In September alone, there was an 11% increase in foreclosure filings, to 37,679, an increase of 18% compared to September of last year.
At the same time, mortgage lenders initiated foreclosure proceedings on 68,961 properties in the US over the previous quarter, an increase of 3% over the third quarter of 2022.
Analysts partly attribute the rise to the end of programs for mortgage forbearance and moratoriums on foreclosures which were put in place during the pandemic, which were reversed during 2021 and 2022. With inflation still sitting above the Federal Reserve’s target rate of 2%, a number of households have been strained financially following the end of the pandemic.
In a statement released on Thursday, ATTOM CEO Rob Barber said, “Foreclosures are on the rise again this quarter, as indicated by our latest foreclosure numbers. Even with the national economic upturn and job stability, it’s evident that some homeowners are still grappling with the pandemic’s financial aftermath or encountering new challenges.”
Analysts note that the next quarter could get even worse, especially as student loan repayments begin again. Those payments will place even more stress on already strained pocketbooks of homeowners, especially with a recent survey by Morgan Stanley finding that 34% of student loan borrowers say they will not be able to make their payments at all.
In the meantime, in the housing market, sales have plummeted, with the increased cost of borrowing due to the high interest rates weighing heavily on demand, driving both buyers and sellers to the sidelines.
