Prepayment Activity at Recession Lows, Total Delinquencies Down YoY

Mortgage prepayment activity reached a 10-year low in November.  Black Knight said, in its "first look" at the months mortgage data, that the character of prepays has been changing from a good indicator of refinance activity to one driven more by home sales.  With refinancing activity fading and home sales entering its usual slow season, prepays fell by 14.95 percent from the previous month and are down 33 percent compared to November 2017.

The company said the last time prepays were this low was in the thick of the financial crisis.  At that point interest rates were above 6 percent and purchase lending had dropped by 50 percent over a two-year period.

The delinquency rate ticked up 1.79 percent during the month to 3.71 percent of all mortgages but are still 18.53 percent lower than a year earlier.  There were 1,925,000 mortgages nationwide that had missed one or more payment but were not in foreclosure.  Serious delinquencies, those over 90 days past due rose by 11,000 to 510,000 but were down 156,000 year-over-year.

The pre-foreclosure inventory rose by 1,000 mortgages during the month to include 268,000 properties in some stage of foreclosure, a rate of 0.52 percent.  Total delinquencies including loans in foreclosure inventory rose by 41,000 loans to a total of 2,193,000 mortgages.   Despite the increases, which Black Knight called "seasonal," total delinquencies have declined by nearly a half million in the last year.

Black Knight will provide a more in-depth review of its November mortgage data in its monthly Mortgage Monitor report which will be available by Jan. 7, 2019.