Due to a weaker economy and ongoing inflationary pressures, the national mortgage delinquency rate increased in the fourth quarter of 2022.
According to the Mortgage Bankers Association (MBA), there was a 51 basis points increase in the one- to four-unit residential properties mortgage loans delinquency rate from the previous quarter to a rate of 3.96% (seasonally adjusted) of all outstanding loans in the last quarter of 2022.
According to MBA’s vice president of industry analysis, Marina Walsh, mortgage delinquencies have closely tracked employment conditions for the past 15 years.
The MBA forecasts slower hiring and higher unemployment by 2023, with interest rates hitting 5.2% by that time. While recent indicators indicate a resilient job market, the MBA predicts slower hiring and higher unemployment. Mortgage delinquencies will likely increase as a result, the MBA said.
A 517,500 increase in nonfarm payrolls in January was far higher than the 187,000 estimate in the market. During the same period, unemployment declined to 3.4% – well below the expected rate of 3.6% – marking the lowest unemployment level since May 1969.
A whopping 209 basis points were added to the FHA delinquency rate in the fourth quarter, raising it to 10.61% from the previous quarter. Quarter-over-quarter, VA loan delinquencies increased by 45 basis points to 4.16%, while conventional loan delinquencies increased by 26 basis points to 2.78%.
Delinquency rates by stage increased 26 basis points from the previous quarter to 1.92%. Over the same period, the 60-day delinquency rate climbed 13 bps to 0.66%, and the 90-day delinquency rate climbed 11 bps to 1.38%.
Even though mortgage delinquencies rose in the fourth quarter, the foreclosure starts rate — 0.14% was well below the historical quarterly average of 0.40%.
During the past two quarters, mortgage holder equity fell by $2.3 trillion – a 13% decrease – due to softening home prices.
The accumulated equity of a home is providing options to avoid foreclosure in spite of recent falls in equity levels.
