According to the Mortgage Bankers Association's latest National Delinquency Survey, delinquency rates for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 3.64 percent of all loans outstanding at the end of the second quarter of 2022.
For the purposes of the survey, MBA asks servicers to report loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage. The delinquency rate was down 47 basis points from the first quarter of 2022 and down 183 basis points from one year ago.
"At 3.64 percent, the mortgage delinquency rate in the second quarter fell to its lowest level since MBA's survey began in 1979 - even beating out the previous pre-pandemic, survey low of 3.77 percent in the fourth quarter of 2019," said Marina Walsh, MBA's Vice President of Industry Analysis. "Most of the improvement across all product types - FHA, VA, and conventional loans - resulted from a decline in the loans that were 90 days or more delinquent but not in the foreclosure process."
According to Walsh, of all the economic indicators that can lead to mortgage delinquencies, the U.S. unemployment rate seems to be the best gauge of loan performance. Despite inflationary pressures, stock market volatility, increases in mortgage rates, and two quarters of economic contraction - often defined as a recession - the job market remains incredibly strong. The unemployment rate was 3.5 percent in July - a half-century low that tracks closely with the record-low mortgage delinquency rate.
Added Walsh, "Foreclosure inventory levels and foreclosure starts remain well below historical averages for the survey - a strong indication that servicers are able to help delinquent borrowers find alternatives to foreclosure. Such alternatives include curing, loan workouts, home sales - with possible equity to spare, or cash-for-keys and deed-in-lieu options."