Mortgage Prepays Continue to Mount, Doubling in Four Months

Mortgage prepayment rates have continued to rise as interest rates move lower. Black Knight says prepayments increased by 24.31 percent in May compared to April and 32.17 percent on an annual basis. The company, in its "first look" at loan performance data for May, says the Single Monthly Mortality (SMM) rate, 1.23 percent, has more than doubled over the past four months and is at its highest level in more than two years.

The national delinquency rate fell for the third consecutive month in May.  There were 1.76 million loans that were at least 30 days past due but not in foreclosure, 3.36 percent of all mortgaged properties.  This was the lowest level in Black Knight's records that date back to January 2000.  Delinquencies fell by 3.03 percent or 52,000 loans compared to April and were down 107,000 or 7.50 percent year over year.

Serious delinquencies, loans 90 or more days past due but not in foreclosure, totaled 461,000, 13,000 fewer than in April.  Serious delinquencies declined by 107,000 year-over-year, identical to the reduction in total delinquencies. This would indicate that the annual improvement in delinquencies came entirely from the 90+ day bucket

There were 39,000 loans put into foreclosure in April, the fewest of any month in more than 18 years.  This was a month-over-month drop of 5.80 percent and 13.14 percent on an annual basis.

The foreclosure inventory rate was 0.49 percent with 255,000 loans in the process of foreclosure, 4,000 loans fewer (-1.65 percent) than in April.  The inventory has dropped by 48,000 loans or 17.38 percent since May 2018.

At the end of May, there were a total of 2.02 non-current loans, the fewest since early 2005.  The highest non-current rates continue to be in Mississippi, Louisiana, and Alabama.

Black Knight will provide a more in-depth review of this data in its monthly Mortgage Monitor report.  It will be available online by July 1, 2019.