Prepayment rates lowest in more than 19 years despite lower rates

But delinquency rate was down again in January

Prepayment rates lowest in more than 19 years despite lower rates

The prepayment rate in January slipped to 0.59% in January, a drop of more than 10% from December and the lowest rate since 2000.

Black Knight Inc.’s ‘first look’ at mortgage data from last month reveals that seasonal reductions in home sales outweighed any early, rate-driven rise in refinance incentive.

With housing turnover now the primary driver of prepayment activity, the data shows a prepayment rate more than 25% lower than a year ago. However, if rates stay low prepayment rates are expected to pick up again in the spring.

Delinquencies continued to improve with a 3.45% drop month-over-month and a 12.93% decline year-over-year to 3.75% (based on loans 30 days or more past due but not in foreclosure). That represents a total of 1,945,000 homes.

The highest non-current percentages were in Mississippi (10.10%), followed by Louisiana (7.96%), Alabama (6.75%), West Virginia (6.42%), and Arkansas (6.04%). These states, except West Virginia, are also in the top 5 for serious (90+ days) delinquencies along with Delaware.

The states with the largest deterioration of non-current percentage in the past 6 months are DC, Nebraska, Illinois, South Dakota, and Iowa.

Colorado posted the smallest non-current percentage at 1.82% followed by Oregon (2.03%), Washington (2.15%), Idaho (2.20%), and Utah (2.45%).

Foreclosure starts post seasonal spike
Foreclosure starts rose seasonally month-over-month (8.42%) but were down more than 19% year-over-year. The number of loans in active foreclosure continued a downward trend with 265,000 active foreclosures, down 72,000 from one year ago.