June’s nearly 10% spike in the national delinquency rate is nothing unusual, according to analytics firm Lender Processing Services.
The company’s Mortgage Monitor report showed about 700,000 newly 30-day delinquent loans in June, but LPS Applied Analytics Senior Vice President Herb Blecher said the delinquency spike is par for the course.
“June’s increase in delinquencies is representative of a documented seasonal phenomenon,” Blecher said. “Over the last 18 years, similar changes occurred in June for all but four of those years. And this month’s increase was felt across all 50 states -- from a roughly 14% month-over-month rise in 30-day delinquencies in Nevada to a nearly 32 percent upswing in Colorado.”
Blecher said that delinquency rates have risen from Q1 to Q2 in all but two years since 1995. Despite being high, June’s 9.9% increase still left the 2013 Q1-to-Q2 delinquency spike at just 1.3%. The average Q1-to-Q2 increase is 7%.
“Of course, focusing solely on month-to-month shifts in mortgage performance can be like tracking the stock market on a daily basis,” Blecher said. “You may see periodic spikes and dips, but without a longer-term perspective, you lack a clear picture of how the market is actually performing. Though June’s 9.9% spike was indeed significant -- and a reversal of five consecutive months of declines -- on a quarterly basis, the rise was much more moderate than the historical average.”
LPS also scrutinized the effect of recent interest rate increases on delinquency rates, but found “no significant impact thus far,” Blecher said.
“Adjustable-rate mortgages, which one would expect to be impacted most by such interest rate changes, actually saw delinquency rates rise at a lower relative rate than those of fixed-rate mortgages,” he said.