MBA: Mortgage Delinquencies Fall to Lowest Level in Nearly 25 Years
Delinquency rates for mortgage loans on one-to-four-unit residential properties fell to their lowest level since 1995, the Mortgage Bankers Association reported yesterday.
The MBA 3Q National Delinquency Survey reported a seasonally adjusted rate of 3.97 percent of all loans outstanding at the end of the third quarter, down by 56 basis points from the second quarter and by 50 basis points from a year ago. The percentage of loans on which foreclosure actions were started in the third quarter fell by 4 basis points to 0.21 percent.
MBA Vice President of Industry Analysis Marina Walsh noted mortgage delinquencies decreased in the third quarter across all loan types–conventional, VA and in particular, FHA, which fell y100 basis points as weather-related disruptions from the spring waned.
“The labor market remains healthy and economic growth has been stronger than anticipated,” Walsh said. “These two factors have contributed to the lowest level of overall delinquencies in almost 25 years. Looking ahead, we do continue to monitor the credit profile of new FHA loans, as changes to this profile can have a noticeable impact on future delinquency rates.”
Key findings of the MBA Third Quarter of 2019 National Delinquency Survey:
–From the second quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding to the lowest level since first quarter 1995. By stage, the 30-day delinquency rate decreased by 42 basis points to 2.20 percent; the 60-day delinquency rate decreased by 6 basis points to 0.75 percent; and the 90-day delinquency bucket decreased by 8 basis points to 1.02 percent.
–By loan type, the total delinquency rate for conventional loans decreased by 61 basis points to 3.00 percent from the second quarter. The FHA delinquency rate decreased by 100 basis points to 8.22 percent, while the VA delinquency rate decreased by 31 basis points to 3.93 percent.
–Year over year, total mortgage delinquencies decreased for all loans outstanding. The delinquency rate decreased by 56 basis points for conventional loans, by 74 basis points for FHA loans and by 23 basis points for VA loans.
–The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the third quarter fell to 0.84 percent, down by 6 basis points from the second quarter and by15 basis points from year ago. This is the lowest foreclosure inventory rate since fourth quarter 1985.
–The seriously delinquent rate–the percentage of loans 90 days or more past due or in the process of foreclosure–fell to 1.81 percent, a decrease of 14 basis points from the second quarter and by 32 basis points from a year ago to the lowest such rate since third quarter 2000. The seriously delinquent rate decreased 19 basis points for conventional loans, decreased 4 basis points for FHA loans and increased by 6 basis points for VA loans from the previous quarter. From a year ago, the seriously delinquent rate decreased by 36 basis points for conventional loans, decreased by 35 basis points for FHA loans and decreased by 8 basis points for VA loans.
–Only 14 percent of all seriously delinquent loans were originated in 2016 or later. However, 25 percent of FHA seriously delinquent loans were originated in 2016 or later.
–States with the largest decreases in their overall delinquency rate were impacted by weather in the previous quarter: Alabama (81 basis points), West Virginia (78 basis points) and Mississippi (73 basis points).
The NDS, conducted since 1953, covers 38 million loans on one- to four- unit residential properties. Loans surveyed were reported by more than 100 lenders, including independent mortgage companies and depositories such as large banks, community banks and credit unions.