Record-Low Mortgage Delinquency Rates Seen During The First Quarter

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Record-Low Mortgage Delinquency Rates Seen During The First Quarter

May 22, 2023 | News | 0 comments

According to the latest survey by the Mortgage Bankers Association, the rate of mortgage delinquency in the first quarter of 2023 reached a seasonally adjusted figure of 3.56%, showing a decrease.

In the first quarter of this year, the delinquency rate for mortgage loans on residential properties consisting of one to four units experienced a quarter-over-quarter decrease of 40 basis points and a year-over-year decrease of 55 basis points. Additionally, there was a slight increase of two basis points, bringing the share of loans with foreclosure actions initiated to 0.16% in Q1.

Marina Walsh, the vice president of industry analysis at MBA, stated that the mortgage delinquency rate reached its lowest level ever recorded for any first quarter since the survey’s inception in 1979. It also stood as the second lowest quarterly rate overall, with only 11 basis points higher than the survey’s lowest rate in the third quarter of 2022. Walsh further mentioned the close correlation between mortgage delinquencies and the unemployment rate, noting that the unemployment rate in April declined to 3.4%, matching the 54-year low set in January.

Anticipating a forthcoming economic slowdown, the MBA predicts a rise in unemployment during the later part of this year and throughout 2024.

Walsh noted that the performance of existing mortgages is surpassing expectations, aligning with the robust job market. She stated that there was a notable improvement in the first quarter compared to the same period a year ago across all states. Additionally, delinquencies for various product types, including FHA, VA, and conventional loans, showed a year-over-year decrease.

When considering different loan types, the delinquency rates exhibited distinct changes. Conventional loans witnessed a significant decrease of 34 basis points, bringing the total delinquency rate down to 2.44% compared to the previous quarter. The FHA delinquency rate experienced a substantial decline of 134 basis points, reaching 9.27%. Similarly, the VA delinquency rate saw a modest decrease of 18 basis points, settling at 3.98% quarter over quarter.

Furthermore, Walsh pointed out that with the conclusion of COVID-19 forbearance programs, distressed borrowers may still have access to alternative forbearance and loss mitigation options.