The delinquency rate on one-to-four-unit residential properties fell to a seasonally adjusted rate of 4.36% as of the end of the second quarter, down 27 basis points from the 4.63% previous quarter, but up 12 basis points from 4.24% in the second quarter of 2017, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
The 30-day delinquency rate dropped two basis points from the previous quarter, while the 60-day and 90-day delinquency buckets dropped by eight and 18 basis points respectively.
The delinquency rate for conventional loans decreased 33 basis points over the previous quarter to 3.45%. The delinquency rate on FHA loans fell by 32 basis points to 8.70% and the delinquency rate on VA loans fell by 35 basis points to 3.97%.
Year-over year, the delinquency rate for conventional loans dropped by two basis points, while the FHA delinquency rate increased by 76 basis points and the VA delinquency rate increased by 25 basis points.
The percentage of loans on which foreclosure actions were started was 0.24%, down 0.4 percentage points to reach the lowest level since the second quarter of 1987.
The percentage of loans in the foreclosure process at the end of the second quarter was 1.05%, down 11 basis points from the first quarter and down 24 basis points compared with a year earlier.
It was the lowest foreclosure inventory rate since the third quarter of 2006.
“We continue to see improvement in the overall mortgage delinquency rate as the impact of the hurricanes from one year ago lessens, particularly for conventional loans,” says Marina Walsh, vice president of industry analysis at MBA, in a statement. “Among the various loan types, the delinquency rate for conventional loans was two basis points lower than one year ago, prior to the hurricanes. While delinquencies for both FHA and VA loans were up from one year ago, they were improved over the previous quarter.
“The economic outlook continues to support good loan performance,” Walsh adds. “Gross domestic product grew at a 4.1 percent rate, the unemployment rate was at an 18-year low, and job growth is averaging over 210,000 jobs per month, so far this year. This means the economy is close to full employment.”
Walsh points out that natural disasters such as the wildfires in California could have a negative impact on the overall delinquency rate.
Other factors include the aging of servicing portfolios as mortgage refinances slow and the changing credit quality among certain loan types.
The report shows that delinquencies continue to decrease in Texas and Florida in the wake of the fall hurricanes – albeit at a slower pace.
The FHA non-seasonally-adjusted mortgage delinquency rate in Texas was 10.53% in the second quarter, compared to 9.56% one year earlier.
In Florida, the non-seasonally-adjusted FHA mortgage delinquency rate was 9.01%, compared to 6.16% one year earlier.