Delinquency, foreclosure rates at lowest levels since 2007

by Ryan Smith07 May 2015
The delinquency rate for mortgages on one- to four-unit residential properties hit its lowest level since 2007 in the first quarter, according to data released Wednesday.

The delinquency rate on one- to four-unit residential properties fell to a seasonally adjusted rate of 5.54% of all loans in the first quarter, according to the Mortgage Bankers Association’s National Delinquency Survey. That’s down 14 basis points from the fourth quarter and down 57 basis points from the first quarter of 2014. It’s also the lowest delinquency rate seen since the second quarter of 2007.

The percentage of loans on which foreclosure actions were initiated in the first quarter also dropped a basis point from the previous quarter, to 0.45%. The serious delinquency rate – the percentage of loans 90 days or more past due or in the process of foreclosure – was 4.24%, a drop of 28 basis points from the fourth quarter and 80 basis points from the first quarter of 2014.

“The job market continues to grow, and this is the most important fundamental improving mortgage performance,” said Joel Kan, MBA’s associate vice president of industry surveys and forecasting. “Additionally, home prices continued to rise, as did the pace of sales, thus increasing equity levels and enabling struggling borrowers to sell if needed.”

The foreclosure inventory rate also declined to 2.2%, its lowest level since the fourth quarter of 2007 and about half the rate’s peak in 2010.

“With a declining 90+ day delinquency rate and the improving credit quality of new loans, we expect that the foreclosure inventory rate will continue to decline in coming quarters,” Kan said. “Foreclosure starts decreased one basis point from the previous quarter, and continue to fluctuate from quarter to quarter mainly due to state-level differences in the speed of the foreclosure process.”

Twenty-seven states saw a decline in foreclosure inventory rates in the first quarter. New Jersey, New York and Florida had the highest percentage of loans in foreclosure, according to the MBA.
 

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