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Lending

Delinquency rate hits lowest level since 2008

State delinquencies improve across the board

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The market is continuing its steady recovery, with the delinquency rate for mortgage loans on one-to-four-unit residential properties falling to 6.96% in the second quarter, the lowest level since mid-2008, the Mortgage Bankers Association said.

The delinquency rate includes loans that are at least one payment past due; however, it does not include loans in the process of foreclosure.  

Also reaching the lowest level since the first quarter of 2007, the percentage of loans on which foreclosure actions were started during the second quarter decreased to 0.64% from 0.70%.

Meanwhile, the serious delinquency rate, which includes loans that are 90+ days past due, sank to 5.8%, a drop of 51 basis points from the first quarter.

The combined percentage of loans at least one payment past due or in foreclosure was at its lowest level in five years, decreasing to 10.13%, 17 basis points lower than last quarter and 149 basis points lower than the same quarter a year ago.

“For most of the country, delinquencies and foreclosures have returned to more normal historical levels. Most states are at or only slightly above longer-term averages, and some of the worst-hit states are showing improvement,” the MBA stated.  

As a whole, the delinquency rate dropped for all loan types except FHA loans.

The FHA 30-day delinquency rate increased by 26 basis points, while the rate for prime, fixed loans and prime ARM loans fell 23 basis points to 3.54% and 87 basis points to 6.75%, respectively.

Additionally, the foreclosure inventory rate plummeted to 3.33%, with the foreclosure inventory rate for prime fixed loans dropping 27 basis points to 1.71%. 

Looking at individual states, foreclosure starts fell or were unchanged in 43 states and the foreclosure inventory rate either improved or was unchanged in 45 states, Jay Brinkmann, MBA’s chief economist and senior vice president of research and economics, said.  

“Both judicial systems and states with nonjudicial systems declined to recent lows, with judicial states seeing the lowest foreclosure inventory since 2009 and nonjudicial states seeing the lowest foreclosure inventory since 2007,” Brinkmann said.

“While overall economic growth and jobs creation have been less than robust, the improvements have not been consistent across the country or all sectors,” he added.  “The result is that those states with the weakest economic growth and the most sclerotic foreclosure systems have seen the slowest improvements in delinquency and foreclosure rates.” 

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