Mortgage Delinquency Rate Increased in Third Quarter

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The national mortgage delinquency rate increased to 4.47% as of the end of the third quarter, up 11 basis points compared with the second quarter but down 41 basis points from a year earlier, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

Marina Walsh, vice president of industry analysis at the MBA, points out the year-over-year decrease is in part due to a drop in storm-related delinquencies stemming from hurricanes Harvey and Irma one year ago.

“The impact of the August and September 2017 hurricanes on several states, particularly Texas and Florida, continues to retreat,” Walsh says in a statement. “Primarily because of the declining effects of last fall’s hurricane-related spike, the overall mortgage delinquency rate in the third quarter was down 41 basis points on a year-over-year basis.”

The percentage of loans on which foreclosure actions were started dropped one basis point compared with the previous quarter to 0.23%, the lowest level since the fourth quarter of 1985.

An improving economy is helping to push delinquencies and foreclosures to pre-crisis lows.

“Despite the small uptick this quarter, the healthy economy is overall supporting low mortgage delinquencies and foreclosure inventories,” she says. “Unemployment is at its lowest level since 1969, wages have grown 3.1 percent year-over-year – the biggest jump in almost a decade – and job growth is averaging over 212,000 jobs per month thus far.”

The report shows that there have been significant delinquency increases in states adversely impacted by Hurricane Florence and Tropical Storm Gordon, including North Carolina, South Carolina, Mississippi, Arkansas and Alabama.

The MBA notes that the impact from Hurricane Michael, which made landfall after the survey reporting period, will not be reflected in its fourth quarter report.

Walsh believes it will likely take several quarters for the most recent storms’ effects on the survey results to dissipate.

In relation to the second quarter, the 30-day delinquency rate increased 20 basis points to 2.51%, the 60-day delinquency rate increased two basis points to 0.77%, and the 90-day delinquency bucket fell 11 basis points to 1.18%.

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