Fueled by Low Rates, Prepayment Rate Continues to Rise

With interest rates remaining at 2019 lows and spring market home sales kicking in, the rate of prepayments continues to rise.  Black Knight, in its "first look" at April mortgage performance data, says the rate is up 17.54 percent from March and 17.65 percent year over year.  Over the last three months the prepayment rate has increased by an aggregate of 67 percent. The rate in April was 0.99 percent.

The delinquency rate fell by 5.05 percent compared to March and is down 5.41 percent from April 2018.  At 3.47 percent of all mortgages in the country, the rate is the lowest in Black Knight's records dated back to 2000.  Loans that were at least 30 days past due but not in foreclosure fell by 91,000 to 1.812 million in April.  This was 73,000 fewer delinquencies than a year earlier.

Serious delinquencies - loans 90 or more days past due, but not yet in foreclosure - fell to 474,000, marking a 124,000 year-over-year decline (19,000 fewer than in March) and a 12-year low.

Foreclosure starts ticked up 4.28 percent to 41,400 mortgages but are still down more than 16 percent from the previous April.  The foreclosure inventory, loans in the process of foreclosure, numbered 259,000 in April, .50 percent of all mortgage loans.  This is down by 5,000 units from March and 55,000 year over year.

Non-current loans nationwide, including those in foreclosure, numbered 2.072 million, 127,000 fewer than in April 2018.  The highest rate of non-current mortgages was in Mississippi at 9.95 percent, an annual increase of 6.5 percent. Louisiana had the second highest rate at 7.67 percent, also higher than during the previous April.  The remaining states at the top of the non-current list were Alabama (6.60 percent), West Virginia (6.13 percent) and Arkansas (5.73 percent).

Black Knight will provide a more in-depth review of this data in its monthly Mortgage Monitor report. The April edition will be available by June 3, 2019.