The national mortgage delinquency rate shot up dramatically in June, reversing five consecutive months of decline, according to Lender Processing Services' (LPS) June Mortgage Monitor report. However, the spike in delinquencies is merely a seasonal phenomenon that has presented before, the mortgage technology and services company said.
The total loan delinquency rate rose to 6.68% in June, an increase of 9.91% over May, according to LPS. About 700,000 people who were current on their mortgages in May fell behind by 30 days in June, the Mortgage Monitor report found. The trend was broad-based, impacting all states.
LPS noted, however, that the increase in total delinquencies for the second quarter compared to the first quarter was ‘below average’ compared to prior years.
The total U.S. foreclosure presale inventory rate was 2.93%, a decrease of 3.92% compared to May.
Herb Blecher, senior vice president of applied analytics at LPS, said the spike, while large, should be viewed as a ‘seasonal phenomenon.’
‘Over the last 18 years, similar changes occurred in June for all but four of those years,’ Blecher said. ‘And this month's increase was felt across all 50 states – from a roughly 14 percent month-over-month rise in 30-day delinquencies in Nevada to a nearly 32 percent upswing in Colorado.’
Blecher said LPS analyzed the data to see if rising interest rates were having any impact on delinquencies, but found ‘no significant impact thus far.’
‘Adjustable-rate mortgages, which one would expect to be impacted most by such interest rate changes, actually saw delinquency rates rise at a lower relative rate than those of fixed-rate mortgages,’ Blecher said.
Blecher pointed out that tracking month-to-month shifts in mortgage delinquencies ‘can be like tracking the stock market on a daily basis. You may see periodic spikes and dips, but without a longer-term perspective, you lack a clear picture of how the market is actually performing.’
‘Though June's 9.9 percent spike was indeed significant – and a reversal of five consecutive months of declines – on a quarterly basis, the rise was much more moderate than the historical average,’ he said. ‘Since 1995, delinquency rates have risen from Q1 to Q2 in all but two years, with an average seven percent increase. By comparison, the 2013 Q1 to Q2 increase was just 1.34 percent.’
To download a copy of the full report, click here.