Mortgage delinquency rate sinks to 17-year low

The MBA said recent loan performance was supported by an improved employment outlook

Mortgage delinquency rate sinks to 17-year low
The overall mortgage delinquency rate dropped in the second quarter to its lowest level since the second quarter of 2000, according to the national delinquency survey released by Mortgage Bankers Association (MBA).

Mortgage loans for one- to four-unit residential properties had a second-quarter seasonally adjusted delinquency rate of 4.24% of all loans outstanding at the end of the period. The second-quarter rate represents a drop of 47 basis points from last quarter and a decrease of 42 basis points from the same period last year.

Of mortgage loans, 0.26% saw foreclosure actions commenced during the quarter. The second-quarter rate fell four basis points from the first quarter and dropped six basis points from the second quarter of 2016. Loans in the foreclosure process at the end of the period made up 1.29% of all loans, 10 basis points lower than last quarter and down 35 basis points from the year-ago period.

During the second quarter, 2.49% of all loans were seriously delinquent, or 90 days or more past due or in the process of foreclosure. The figure is 27 basis points lower than the first-quarter rate and 62 basis points down from the year-ago quarter.

In terms of loan types, the seasonally adjusted mortgage delinquency rates across conventional, FHA, and VA loans decreased during the quarter. Conventional loans saw rates fall to their lowest level since 2005 to 3.47% from 4.04% last quarter. The delinquency rate for FHA loans fell to 7.94%, its lowest level since 1996, from 8.09% in the first quarter. Dropping to its lowest level since 1979, the rate for VA loans was 3.72% during the quarter, compared to 3.90% in the first quarter.

"The employment outlook continues to support loan performance,” said Marina Walsh, MBA's vice president of industry analysis. “Monthly job growth topped 200,000 jobs in June for the fourth time in the first six months of the year. Job growth in the month of July also topped 200,000. Possible factors that could influence a directional change include rising loan-to-value and debt-to-income ratios for certain product types, as affordability is stretched by tight inventory and rising home prices, and normal loan aging."

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