Housing MarketMortgageReal Estate

Mortgage delinquency rates improve across the board

Foreclosure starts rose 17% in January, but the rate is still 37% below pre-pandemic levels

Mortgage delinquencies were down across the board in January, with the overall national delinquency rate declining to 3.38%, a drop of 10 basis points from December, according to Black Knight’s month-end mortgage performance statistics.

National delinquency in January declined 15.1% compared to the same period last year. The number of borrowers 30-days late decreased by 46,000, or 4.8%, from the previous month, while serious delinquencies – which refer to 90-plus days past due – improved again, falling by 4,000, or 0.7%, during the same period. 

Inventories that were 90-plus days late on mortgage payments increased largely in Florida. Still dealing with the aftermath of Hurricane Ian, the state saw another 1,700 loans fall into serious delinquency.

Data was derived from its newly expanded McDash loan-level mortgage data set that gives “insight into more than 200 million active and historical loan-level mortgage records for even more granular and representative analyses of today’s complex market,” according to Black Knight. 

There are more than 80 contributors to McDash data set, and Black Knight’s eMBS agency securities data provides clarity into performance across an active mortgage universe of some 52 million loans, according to the firm.

The national delinquency rate in January is an improvement from the fourth quarter of 2022 when the Mortgage Bankers Association (MBA) noted an uptick in mortgage delinquency due to a weaker economy and inflation.

The delinquency rate for mortgage loans on one- to four-unit residential properties rose to a seasonally adjusted rate of 3.96% of all loans from the previous quarter.

The latest economic data showed a robust job market, resilient consumer spending and a slowdown in disinflation numbers.

Foreclosure starts rose 17% in January to 33,000, marking the fourth consecutive increase. However, the foreclosure starts are still 37% below pre-pandemic levels. While foreclosure started on 5.6% of serious delinquencies last month, Black Knight noted those numbers are still 48% below the start rate seen in January 2020.

Active foreclosure inventory rose by 2.5% in January and is now up 48,000, or 20%, year over year. A total of 7,000 foreclosures were completed nationally in January, up 15.2% from the previous month, but remained nearly 50% below early 2020 levels. 

As purchase and refinance lending continue to face interest rate headwinds, the monthly prepayment rate dropped 19.5% month over month to hit another record low in January, dating back to at least 2000 when Black Knight began reporting the metric.

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