Mortgage delinquencies hit 25-year low

by Ryan Smith15 Nov 2019

Mortgage delinquencies have fallen to a 25-year low, according to new data from the Mortgage Bankers Association.

The delinquency rate for mortgages on one- to four-unit residential properties fell to a seasonally adjusted rate of 3.97% of all loans outstanding at the end of the third quarter, according to the MBA’s National Delinquency Survey. The delinquency rate was down 56 basis points from Q2 and down 50 basis points from Q3 2018. The percentage of loans on which foreclosure actions were initiated fell by four basis points in Q3 to 0.21%.

“Mortgage delinquencies decreased in the third quarter across all loan types – conventional, VA, and, in particular, FHA,” said Marina Walsh, MBA’s vice president of industry analysis. “The FHA delinquency rate dropped 100 basis points as weather-related disruptions from the spring waned. The labor market remains healthy and economic growth has been stronger than anticipated. These two factors have contributed to the lowest level of overall delinquencies in almost 25 years.”

In Q3, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding to the lowest level since the first quarter of 1995, according to the MBA. The 30-day delinquency rate fell 42 basis points to 2.2%, the 60-day rate fell six basis points to 0.75%, and the 90-day rate fell eight basis points to 1.02%.

The delinquency rate for conventional loans fell by 61 basis points over the quarter to 3%. The FHA delinquency rate dropped 100 basis points to 8.22%, and the VA rate fell by 31 basis points to 3.93%, according to the study.

On a year-over-year basis, total mortgage delinquencies fell for all loans outstanding. The rate fell by 56 basis points for conventional loans, 74 basis points for FHA loans, and 23 basis points for VA loans.

The delinquency rate includes mortgages that are at least one payment past due, but doesn’t include loans in foreclosure. The percentage of loans in the foreclosure process at the end of Q3 was 0.84%, a six-basis-point drop from Q2 and 15 basis points lower than Q3 2018. This is the second-lowest foreclosure inventory rate since the fourth quarter of 1995, the MBA reported.