According to the Mortgage Bankers Association's latest National Delinquency Survey, the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 4.06 percent of all loans outstanding at the end of the fourth quarter of 2018.
The delinquency rate was down 41 basis points from the third quarter of 2018 and 111 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the fourth quarter rose by two basis points to 0.25 percent.
"The overall national mortgage delinquency rate in the fourth quarter was at its lowest level since the first quarter of 2000," said Marina Walsh, MBA's Vice President of Industry Analysis. "What's even more noteworthy, the delinquency rate dropped from the previous quarter and on a year-over-year basis across all loan types and stages of delinquency."
Added Walsh, "With the unemployment rate near a 50-year low, wage growth trending higher and household debt levels relative to disposable incomes at a 35-year low, homeowners are in great shape, and mortgage performance is quite strong."
Walsh notes that in the fourth quarter of 2018, there were improvements in states adversely impacted by natural disasters these last two years. For example, the delinquency rate in Florida dropped 458 basis points on a year-over-year basis, once the effects of Hurricane Irma dissipated. Similarly, the delinquency rate in Texas dropped 218 basis points in the fourth quarter from a year ago, once the effects of Hurricane Harvey dissipated. States affected by more recent storms such as North Carolina, South Carolina, Mississippi, Arkansas and Alabama showed improvements at the end of last year, after experiencing delinquency spikes in the third quarter.
"Florida's Hurricane Michael in October, as well as the California fires in November, have had limited impact on the overall delinquency rates in those states," said Walsh.
Foreclosure starts did rise by two basis points in the fourth quarter, and according to Walsh, were likely driven by the lifting of foreclosure moratoriums in states impacted by natural disasters, in combination with severely delinquent loans that have finally moved into the foreclosure process - particularly those loans in judicial states where foreclosure procedures are much slower moving.Key findings of MBA's Fourth Quarter of 2018 National Delinquency Survey:
- In relation to the third quarter of 2018, mortgage delinquencies decreased across all stages of delinquency. The 30-day delinquency rate decreased 22 basis points to 2.29 percent, the 60-day delinquency rate decreased three basis points to 0.74 percent, and the 90-day delinquency bucket decreased 15 basis points to 1.03 percent.
- In relation to the third quarter of 2018, mortgage delinquencies decreased across all loan types. The delinquency rate for conventional loans decreased 37 basis points to 3.19 percent over the previous quarter. The FHA delinquency rate decreased 31 basis points to 8.65 percent, and the VA delinquency rate decreased by 45 basis points, to 3.71 percent, over the previous quarter.
- On a year-over-year basis, mortgage delinquencies dropped across all loan types. The delinquency rate for conventional loans dropped by 100 basis points, while the FHA and VA delinquency rates dropped 173 basis points and 78 basis points, respectively, from the previous year.
- 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 0.95 percent, down four basis points from the third quarter of 2018 and 24 basis points lower than one year ago. This was the lowest foreclosure inventory rate since the first quarter of 1996.
- The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 2.06 percent - a decrease of seven basis points from last quarter - and a decrease of 85 basis points from last year.
- The five states most impacted by the September 2018 storms saw their overall mortgage delinquency rates drop in the fourth quarter (after a spike in the third quarter): Mississippi (41 basis points), South Carolina (33 basis points), North Carolina (28 basis points), Alabama (28 basis points) and Arkansas (17 basis points).
- On a year-over-year basis, Texas and Florida posted the biggest improvements in their overall mortgage delinquency rates, and are tracking with levels immediately prior to the September 2017 hurricanes. The non-seasonally-adjusted overall mortgage delinquency rate in Texas dropped 218 basis points from last year to 5.15 percent. In Florida, the non-seasonally-adjusted overall mortgage delinquency rate on all loans dropped 458 basis points from last year, to 4.31 percent.