U.S. Mortgage Delinquency Rate Fell to 25-Year Low in Q3

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The U.S. mortgage delinquency rate continued to fall during the third quarter, reaching the lowest overall level in more than 25 years, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey

As of the end of the quarter, roughly 3.97% of all loans outstanding were in some stage of delinquency. That’s down 56 basis points compared with the second quarter and down 50 basis points from the third quarter of 2018.

The percentage of loans that were seriously delinquent – or 90 days or more past due or in the process of foreclosure – was 1.81%, a decrease of 14 basis points compared with the previous quarter and a decrease of 32 basis points compared with a year earlier.

That’s the lowest seriously delinquent rate since the third quarter of 2000.

Helping to drive the overall decrease was a sharp drop in the delinquency rate for FHA loans, which typically have higher delinquency rates compared with non-government mortgages.

The FHA delinquency rate plummeted 100 basis points to 8.22% in the third quarter, while the VA delinquency rate fell by 31 basis points to 3.93%.

Looking at the seriously delinquent loans by vintage, only 14% were originated in 2016 or later.

However, 25% of FHA seriously delinquent loans were originated in 2016 or later.

The percentage of loans on which foreclosure actions were started fell by four basis points to 0.21%. 

“Mortgage delinquencies decreased in the third quarter across all loan types – conventional, VA, and in particular, FHA,” says Marina Walsh, vice president of industry analysis for the MBA, in a release. “The FHA delinquency rate dropped 100 basis points, as weather-related disruptions from the spring waned. The labor market remains healthy and economic growth has been stronger than anticipated. These two factors have contributed to the lowest level of overall delinquencies in almost 25 years.”

States that saw the largest decreases in their overall delinquency rates included Alabama (down 81 basis points), West Virginia (78 basis points) and Mississippi (73 basis points).

Earlier this week CoreLogic released a report showing that the mortgage delinquency rate for August hit the lowest level in more than 20 years.

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