Residential mortgage performance continues to improve to the highest levels seen in years, according to a new report from the Mortgage Bankers Association.
The delinquency rate for mortgage loans on one- to four-unit residential properties decreased to a seasonally adjusted rate of 4.24 percent of all loans outstanding at the end of the second quarter of 2017, according to according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The delinquency rate was down 47 basis points from the previous quarter, and was 42 basis points lower than one year ago.
The percentage of loans on which foreclosure actions were started during the second quarter was 0.26 percent, a decrease of four basis points from the previous quarter, and six basis points lower than one year ago.
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 second quarter was 1.29 percent, down 10 basis points from the previous quarter and 35 basis points lower than one year ago.
The serious delinquency rate (loans that are 90 days or more past due or in the process of foreclosure), was 2.49 percent in the second quarter, down 27 basis points from the previous quarter and 62 basis points lower than one year ago.
Mortgage delinquencies decreased in the second quarter of 2017 across all loan types – conventional, FHA and VA – on a seasonally-adjusted basis. The conventional delinquency rate dropped to 3.47 percent from 4.04 percent in the first quarter, reaching its lowest level since 2005. The FHA delinquency rate decreased to 7.94 percent from 8.09 percent in the first quarter, reaching its lowest level since 1996. The VA delinquency rate dropped to 3.72 percent from 3.90 percent in the first quarter, reaching its lowest level since 1979.
“In the second quarter of 2017, the overall delinquency rate was at its lowest level since the second quarter of 2000,” Marina Walsh, MBA vice president of industry analysis, said in a statement. “The foreclosure inventory rate was at its lowest level since the first quarter of 2007. In addition, the seriously delinquent rate, which combines loans that are 90 days or more past due with those loans in the process of foreclosure, dropped to a 10-year low.”
Walsh said the economic outlook supports positive loan performance.
“Monthly job growth topped 200,000 jobs in June for the fourth time in the first six months of the year,” she said in a statement. “Job growth in the month of July also topped 200,000. Possible factors that could influence a directional change include rising loan-to-value and debt-to-income ratios for certain product types, as affordability is stretched by tight inventory, rising home prices and normal loan aging.”
