Delinquencies Increased Slightly in First Quarter

Delinquency rates popped up in the first quarter, pushing the percentage of mortgage loans that were behind by at least one payment up 36 basis points (bps) to 4.42 percent.  The rate, derived from the Mortgage Bankers Association's (MBA's) quarterly National Delinquency Survey was 21 bps lower than in the first quarter of 2018. Foreclosures were started on 0.23 percent of mortgage loans, down 2 bps from the previous quarter and 5 bps year-over-year.

"The national mortgage delinquency rate in the first quarter of 2019 was down on a year-over-year basis, which is another sign of a very strong economic environment, bolstered by low unemployment and rising wage growth," said Marina Walsh, MBA's Vice President of Industry Analysis. "Moreover, the serious delinquency rate - the percentage of loans that are 90 days or more past due or in the process of foreclosure - dropped across all loan types from the previous quarter and a year ago to its lowest overall level since the second quarter of 2006."

While the overall rate is higher than at several points in 2017 and 2018, it is still the fourth lowest in the last 12 years. Walsh noted that it was pushed higher by a 29 bps rise in early stage (30 to 60 days) delinquencies to 2.58 percent.  The percentage of loans 60 days or more past due increased by 7 bps to 0.81 percent while the 90-day rate was unchanged at 1.03 percent.

There was also a big jump in the VA loan delinquency rate, up 66 bps to 4.37 percent. Delinquency rates for conventional and FHA loans grew by 27 and 28 bps respectively to 3.46 percent and 8.93 percent.  On a year-over-year basis, the seasonally adjusted overall delinquency rate decreased for conventional loans (32 bps) and FHA loans (9bps) but increased 5 bps for VA loans.

The percentage of loans in foreclosure, which is not included in the overall rate, was 0.92 percent, down 3 bps from the fourth quarter of 2018 and 24 bps lower than one year ago. This is the lowest foreclosure inventory rate since the fourth quarter of 1995.

Serious delinquencies (the 90-day delinquent bucket plus the foreclosure inventory) were at a rate of 1.96 percent in the first quarter, a decrease of 10 bps and 65 bps from the previous quarter and from a year earlier.  The rate was down from the previous quarter by 6 bps for conventional loans, 31 bps for FHA loans, and 9 bps for VA loans.  On a year-over-year basis the declines were 67 bps for conventional loans, 77 bps for FHA, and 35 bps for VA loans.

The NDS, which has been conducted since 1953, covers 38 million loans on one- to four- unit residential properties. Loans surveyed were reported by over 100 lenders, including mortgage bank, commercial banks, and thrifts.