The mortgage delinquency rate on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.98% as of the end of the fourth quarter, according to the Mortgage Bankers Association.
That’s up 6 basis points compared with the end of the third quarter and up 10 basis points from one year ago.
Most of the overall increase was attributable to significant increases in delinquencies for FHA and VA loans: The FHA delinquency rate increased 57 basis points to 11.03%, while the VA delinquency rate increased 12 basis points to 4.70%.
Meanwhile the total delinquency rate for conventional loans decreased by 1 basis point to 2.62% compared with the previous quarter.
Year over year, the delinquency rate increased 22 basis points for FHA loans and increased 63 basis points for VA loans, whereas it increased just 1 basis point for conventional loans.
The percentage of loans on which foreclosure actions were started in the fourth quarter increased by 1 basis point to 0.15%.
“Although mortgage delinquencies rose only ten basis points in the fourth quarter of 2024 compared to one year ago, the composition of the delinquencies changed,” says Marina Walsh, CMB, vice president of industry analysis for the MBA, in a statement. “Conventional delinquencies remain near historical lows, but FHA and VA delinquencies are increasing at a faster pace. By the end of the fourth quarter, the spread between the FHA and conventional delinquency rates reached 841 basis points, while the VA and conventional spread was 208 basis points.”
“Government loans are also rolling to later stages of delinquency,” Walsh adds. “Compared to one year ago, the seriously delinquent rate rose seventy basis points for FHA loans and fifty-seven basis points for VA loans, but only two basis points for conventional loans.”
While the labor market remains relatively strong and often tracks with mortgage performance, some of today’s headwinds include inflationary pressures, lower personal savings rates, natural disasters, increasing consumer debt, higher tax and insurance payments, and higher debt-to-income ratios. All of these factors may be impacting government borrowers to a greater extent than conventional borrowers, the MBA says.
By stage, the 30-day delinquency rate decreased 9 basis points to 2.03%; the 60-day delinquency rate increased 3 basis points to 0.76%; and the 90-day delinquency bucket increased 11 basis points to 1.19%.
The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.45%, unchanged from the third quarter and down 2 basis points from a year ago.
The five states with the largest quarterly increases in their overall delinquency rate included Florida (up 99 basis points), South Carolina (up 59 basis points), North Carolina (up 40 basis points), Georgia (up 39 basis points), and Louisiana (up 32 basis points).
Photo: Andy Beales
