The share of U.S. homeowners who were late paying mortgages fell to an almost 25-year low in the third quarter as a strong labor market helped borrowers pay their bills on time, the Mortgage Bankers Association said on Thursday.
The delinquency rate fell to 3.97% in the third quarter, the lowest since 1995’s first quarter, MBA said. The rate that measures all loan past due that aren’t yet in foreclosure fell 56 basis points from the second quarter and 50 basis points from the year-ago period.
By loan type, the total delinquency rate for conventional loans was 3%, a drop of 61 basis points from the second quarter. The delinquency rate for loans backed by the Federal Housing Administration was 8.22%, down 100 basis points, and the rate for mortgages backed by the Veterans Administration decreased by 31 basis points to 3.93%.
“Mortgage delinquencies decreased in the third quarter across all loan types – conventional, VA, and in particular, FHA,” said Marina Walsh, MBA’s vice president of industry analysis. “The labor market remains healthy and economic growth has been stronger than anticipated. These two factors have contributed to the lowest level of overall delinquencies in almost 25 years.”
The share of loans in the foreclosure process at the end of the third quarter was 0.84%, down six basis points from the second quarter of 2019 and 15 basis points from a year ago. That’s the lowest foreclosure inventory rate since the fourth quarter of 1985.
The seriously delinquent rate – the percentage of loans 90 days or more past due – dropped to 1.81%, down 14 basis points from the previous quarter and a drop of 32 basis points from last year. It was the lowest seriously delinquent rate since the third quarter of 2000.