The national mortgage delinquency rate increased to 3.62% as of the end of the third quarter, up 25 basis points from the second quarter and up 17 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
The percentage of loans on which foreclosure actions were started increased 1 basis point to 0.14%.
“The national mortgage delinquency rate increased in the third quarter from the record survey low reached in the second quarter of this year, with an uptick in delinquencies across all loan types – conventional, FHA, and VA,” says Marina Walsh, vice president of industry analysis for the MBA, in a statement. “The increase was driven entirely by a rise in earliest-stage delinquencies – those 30-days and 60-days past due. Later-stage delinquencies – those 90 days or more past due – declined to the lowest level since the first quarter of 2020.
“The decline in later-stage delinquencies, along with a foreclosure starts rate of 0.14 percent – which is well below the historical quarterly average of 0.40 percent – suggest that distressed homeowners may be utilizing available loss mitigation options that prevent a foreclosure start,” Walsh adds. “Additionally, accumulated home equity may also be enabling some homeowners to sell their homes well before foreclosure becomes a possibility.”
Mortgage delinquencies and employment conditions continue to track very closely, according to Walsh. The labor market has shown recent signs of weakening, with the unemployment rate increasing to 3.9% in October, the highest level since January 2022.
The MBA forecasts slower hiring and rising unemployment, with the rate rising to 5.0% by the end of next year.
“The increase in unemployment will likely mean further increases in mortgage delinquencies, particularly for FHA borrowers,” Walsh says.