Percentage of mortgage delinquencies hits a five-year low
The percentage of mortgage delinquencies is at a five-year low for the second quarter, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
Mortgage delinquencies on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 6.96 percent of all loans outstanding at the end of the second quarter of 2013, the lowest level since mid-2008. The delinquency rate dropped 29 basis points from the previous quarter, and 62 basis points from 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 on which foreclosure actions were started during the second quarter decreased to 0.64 percent from 0.70 percent. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 5.88 percent.
The combined percentage of loans at least one payment past due or in foreclosure was at its lowest level in five years, decreasing to 10.13 percent on a non-seasonally adjusted basis, 17 basis points lower than last quarter and 149 basis points lower than the same quarter one year ago.
What Does This Mean For the Market?
According to Don Frommeyer, President of the National Association of Mortgage Brokers (NAMB), the market is still seeing lingering effects from when the mortgage delinquencies skyrocketed after the housing bubble burst. However, even though the mortgage market is not completely in the clear, he says the low numbers are a great sign of improvement.
“Serious delinquency rates are difficult to recover from and it’s also dependent on each state’s mortgage practices,” Frommeyer said. “For example, states that don’t require mortgage companies to take back homes by appearing in front of a judge can recover faster compared to states that require judicial foreclosures. That being said, it’s a positive sign to see the numbers decline overall and across the board.”