Mortgage delinquency rate dropped in Q4

by Candyd Mendoza13 Feb 2020

The mortgage delinquency rate continued its downward trend at the end of the fourth quarter of 2019, according to the Mortgage Bankers Association.

MBA’s National Delinquency Survey showed that the delinquency rate for mortgage loans on one- to four-unit residential properties fell to a seasonally adjusted rate of 3.77% of all closed loans. The rate was down 20 basis points from Q3 2019 and 29 basis points from Q4 2018. The share of loans in the process of foreclosure in the fourth quarter held steady at 0.21%

Marina Walsh, vice president of industry analysis at MBA, said that mortgage delinquencies hit their lowest level since the survey began in 1979.

"Mortgage delinquencies track closely to the US unemployment rate, and with unemployment at historic lows, it's no surprise to see so many households paying their mortgage on time,” Walsh said. “Signs of healthy conditions were seen in other parts of the survey. The foreclosure inventory rate (the percentage of loans in the foreclosure process) was at its lowest level since 1985. Furthermore, states with lengthier judicial processes continued to chip away at their foreclosure inventories, and it also appears that with home-price appreciation and equity accumulation, distressed borrowers have had alternative options to foreclosure."

New York and Maine (27 bps both) saw the biggest drop in foreclosure inventory rate over the past quarter, followed by Hawaii (17 bps), New Jersey (15 bps), New Mexico (14 bps), and Vermont (14 bps).

Other findings of MBA’s National Delinquency Survey include:

  • Compared to last quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding. By stage, the 30-day delinquency rate dropped three basis points to 2.17%, the 60-day delinquency rate decreased five basis points to 0.70%, and the 90-day delinquency bucket decreased 12 basis points to 0.90%.
  • By loan type, the total delinquency rate for conventional loans decreased 18 basis points to 2.82% over the previous quarter. The FHA delinquency rate increased 16 basis points to 8.38%, and the VA delinquency rate decreased by 29 basis points to 3.64% over the previous quarter.
  • On a year-over-year basis, total mortgage delinquencies decreased for all loans outstanding. The delinquency rate decreased by 37 basis points for conventional loans, decreased 27 basis points for FHA loans, and decreased seven basis points for VA loans from the previous year.
  • 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 fourth quarter was 0.78%, down six basis points from the third quarter of 2019 and 17 basis points lower than one year ago. This was the lowest foreclosure inventory rate since the third quarter of 1985.
  • The seriously delinquent rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 1.76% – a decrease of 5 basis points from last quarter – and a decrease of 30 basis points from last year. This is the lowest rate since the third quarter of 2000. The seriously delinquent rate decreased nine basis points for conventional loans, increased eight basis points for FHA loans, and increased five basis points for VA loans from the previous quarter. Compared to a year ago, the seriously delinquent rate decreased 34 basis points for conventional loans, decreased 29 basis points for FHA loans and decreased four basis points for VA loans.