The delinquency rate for mortgage loans on one-to-four unit residential properties decreased to a seasonally adjusted rate of 3.77 percent of all loans outstanding at the end of the fourth quarter of 2019, the lowest on record.
The delinquency rate was down 20 basis points from the third quarter of 2019 and 29 basis points from one year ago, according to data from the Mortgage Bankers Association. The percentage of loans on which foreclosure actions were started in the fourth quarter remained unchanged at 0.21 percent.
“The mortgage delinquency rate in the final three months of 2019 fell to its lowest level since the current survey series began in 1979,” Marina Walsh, MBA’s vice president of industry analysis, said in a statement. “Mortgage delinquencies track closely to the U.S. unemployment rate, and with unemployment at historic lows, it’s no surprise to see so many households paying their mortgage on time.”
The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.78 percent, down 6 basis points from the third quarter of 2019 and 17 basis points lower than one year ago. This was the lowest foreclosure inventory rate since the third quarter of 1985.
“[S]tates with lengthier judicial processes continued to chip away at their foreclosure inventories, and it also appears that with home-price appreciation and equity accumulation, distressed borrowers have had alternative options to foreclosure,” Walsh said.
By loan type, the total delinquency rate for conventional loans decreased 18 basis points to 2.82 percent over the previous quarter, and the VA delinquency rate decreased by 29 basis points to 3.64 percent over the previous quarter. The FHA delinquency rate did increase over the previous quarter, by 16 basis points to 8.38 percent.
On a year-over-year basis, total mortgage delinquencies decreased for all loans outstanding. The delinquency rate decreased by 37 basis points for conventional loans, 27 basis points for FHA loans and 7 basis points for VA loans from the previous year.
The states with the largest decreases in their foreclosure inventory rate over the previous quarter include: New York (27 basis points), Maine (27 basis points), Hawaii (17 basis points), New Jersey (15 basis points), New Mexico (14 basis points) and Vermont (14 basis points). All of these states except Hawaii have judicial foreclosure processes; Hawaii has both judicial and non-judicial processes.
