Mortgage delinquencies fell to a record low in May as a strong labor market helped Americans to pay their mortgages on time.
Late payments fell to 3.36%, the lowest ever recorded in data that goes back to 2000, according to a report from Black Knight on Thursday. The number includes all mortgages 30 days past due but not in foreclosure.
There were 39,000 foreclosure starts in May, the lowest number in more than 18 years, Black Knight said. That was a drop of 5.8% from the prior month and down 13% from a year ago.
The prepayment rate on first-lien U.S. mortgages rose 24% in May, double the rate of four months ago, the company said in its “First Look” report. Compared to May 2018, the prepayment rate was up 32%.
The average U.S. rate for a 30-year fixed mortgage was 3.82% in the first two weeks of June, the lowest level in almost two years, according to Freddie Mac. This week, the rate rose two basis points to 3.84%. A year ago, the rate was 4.57%.
Mortgage rates have tumbled as investors worried about the slowing of the U.S. economy and trade tensions between the U.S. and China, the world’s two largest economies, ratcheted up. The Federal Reserve left its benchmark rate unchanged at the end of a two-day meeting on Wednesday but dropped the word “patient” from its statement, signaling a rate cut may be coming as soon as next month.
For the year, the rate will probably average 4.1%, down from 4.6% in 2018, Freddie Mac said in its June forecast. Broken out by quarters, the average rate was 4.2% in 2019’s first quarter, and probably will average 4% in for the balance of the year, according to the forecast.
Cheaper rates will probably boost the refinancing share of mortgage originations to 33% this year from 30% in 2018, Freddie Mac said. That should push mortgage originations for refinances to $584 billion in 2019 from $487 billion last year, according to the forecast. Purchase originations probably will rise to $1.19 trillion this year from $1.15 trillion in 2018, Freddie Mac said.