Mortgage delinquency rises in last three months of 2016 – survey

by MPA21 Feb 2017

The mortgage delinquency rate for one-to-four-unit residential properties rose 4.80% on a quarter-to-quarter basis during the last three months of 2016, a survey by the Mortgage Bankers’ Association (MBA) revealed.

All loan types – Federal Housing Administration (FHA), VA (Veterans Affairs), and conventional – saw an increase in their delinquency rates from the third quarter, marking a hike from the lowest overall level since 2006:

  • FHA: 9.02%
  • VA: 4.00%
  • Conventional loans: 4.04%

“It is not unexpected that delinquencies could eventually increase off such a low base,” said Marina Walsh, MBA vice president of industry analysis.

The increase among FHA loans was driven primarily by the FHA 30-day delinquency category, which increased 55 basis points over the quarter. “The increase in early stage FHA delinquencies was led by loans made in 2014, 2015 and 2016,” the MBA report said.

On a year-over-year basis, only conventional loans saw a delinquency rate increase (6 basis points).

The serious delinquency rate increased to 3.13% from 2.96% in the third quarter, when the rate was at its lowest level since 2007. The figure refers to loans that are 90 days or more past due or are in the process of foreclosure.

“The increase in the fourth quarter was driven by an increase in loans 90+ days past due, even though loans in foreclosure continued to decrease. Over 70 percent of seriously delinquent loans were attributable to loans originated in 2007 and earlier,” Walsh said.

The foreclosure starts rate dropped to its lowest level since 1988, with a decrease of two basis points. All loan types saw a decrease in the figure during the last quarter of 2016.

“The overall foreclosure inventory dropped by two basis points, and remained at its lowest level since 2007,” Walsh said. “We continue to see strong fundamentals in the overall economy, such as rising home values and increased employment, which bodes well for the future performance of FHA, VA and conventional loans.”

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