Despite the impact of the fall hurricanes and wildfires, the national mortgage delinquency rate fell to 4.06% as of the end of the fourth quarter, down 41 basis points compared with the third quarter and down 111 basis points compared with the fourth quarter of 2017, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
Mortgages that were 30-60 days past due represented 2.29% of all loans; mortgages that were 60-90 days past due represented 0.74%; and mortgages that were 90 days or more past due represented 1.03%, according to the report. All three categories were down compared with the previous quarter.
The delinquency rate was also down across all loan/product types.
Despite the drop in the delinquency rate, the percentage of loans on which foreclosure actions were started increased slightly to 0.25%.
“The overall national mortgage delinquency rate in the fourth quarter was at its lowest level since the first quarter of 2000,” says Marina Walsh, vice president of industry analysis for the MBA, in a statement. “What’s even more noteworthy, the delinquency rate dropped from the previous quarter and on a year-over-year basis across all loan types and stages of delinquency.”
If the U.S. economy continues to improve, the mortgage delinquency rate could go even lower.
“With the unemployment rate near a 50-year low, wage growth trending higher and household debt levels relative to disposable incomes at a 35-year low, homeowners are in great shape, and mortgage performance is quite strong,” Walsh says.
Areas impacted by the disasters last fall were already starting to see signs of improvement in terms of delinquency rates as of the end of December, the report shows.
“Florida’s Hurricane Michael in October, as well as the California fires in November, have had limited impact on the overall delinquency rates in those states,” Walsh says.
However, the slight increase in foreclosure starts may have been a result of the lifting of foreclosure moratoriums in the impacted states. In addition, some loans there were severely delinquent in those areas may have finally moved into the foreclosure process.
The foreclosure inventory – the percentage of loans that were in some stage of foreclosure – was 0.95%, down four basis points compared with the previous quarter and down 24 basis points from a year earlier.
It was the lowest foreclosure inventory rate since the first quarter of 1996.