Low Rates Stoke Second Month of Prepayment Gains

Black Knight Financial Services said on Thursday that continued low interest rates fostered another increase in prepayments. The national prepayment rate, considered a sign of refinance activity, rose 5.3 percent in June on top of a 23 percent jump in May.  It now stands at 1.12 percent.  Despite these gains, it still lags the rate last year by more than 22 percent.

The company released the prepayment information as part of its "first look" at June loan performance data. More detailed analysis will be presented in its next issue of Mortgage Monitor which will be available on August 7.

Black Knight said the national mortgage delinquency rate resisted typical seasonal pressures, held steady at 3.8 percent in June.  Early delinquencies increased, pushing the non-current rate up by 3.0 percent, but declines in serious delinquencies and the number of properties in the process of foreclosure offset those gains. The overall delinquency rate is down by 11.84 percent since June 2018.

Properties that were 30 or more days past due but not in foreclosure numbered 1.932 million in June, up 5,000 from May but just shy of a quarter million fewer than in June 2016. Of those, 555,000 were more than 90 days past due but not in foreclosure, a decline of 7,000 from May and 137,000 year-over-year.

The pre-sale inventory, a measure of homes in the process of foreclosure, shrank by 2.71 percent or 11,000 units during the reporting period and has declined by 148,000 (27.01 percent) since last June. The inventory now contains 410,000 properties, 0.81 percent of mortgaged homes.

There were 2.342 million non-current properties nationwide in June, including those that are 30 days or more past due or in foreclosure. This is a month-over-month change of -6,000 and down 394,000 year-over-year.  Serious delinquencies and active foreclosures have declined by an aggregate of 200,000 loans or 17 percent since the first of the year.

There were 56,500 foreclosure starts during the month, a slight 1.25 percent uptick from May and down 18.47 percent on an annual basis. The foreclosure sales rate, measured as a percentage of loans more the 90 days past due, was 2.20 percent. This was up 1.57 percent from May but 4.58 percent lower year-over-year.

The states with the largest percentage of non-current loans continue to be Mississippi, at 10.13 percent, Louisiana (8.64 percent) and Alabama (7.13 percent). Alaska was the only state to see an increase in its non-current rate. It rose by 7.10 percent over the six months ending in June.