A healthy economy is supporting low mortgage delinquencies, says MBA
Mortgage delinquencies increased slightly in the third quarter but remained low amid the healthy economy, according to the results of the National Delinquency Survey released by the Mortgage Bankers Association's (MBA).
The delinquency rate for mortgage loans on one- to four-unit residential properties rose to a seasonally adjusted rate of 4.47% of all loans outstanding at the end of the third quarter. The rate was up 11 basis points from the previous quarter but down 41 basis points from one year ago.
"Despite the small uptick this quarter, the healthy economy is overall supporting low mortgage delinquencies and foreclosure inventories," said Marina Walsh, vice president of industry analysis at MBA. "Unemployment is at its lowest level since 1969, wages have grown 3.1% year-over-year – the biggest jump in almost a decade – and job growth is averaging over 212,000 jobs per month thus far."
Meanwhile, foreclosure actions were started on 0.23% of loans during the quarter, a one-basis-point drop from the last quarter to its lowest level since the fourth quarter of 1985.
Walsh noted that natural disasters are a major factor in determining whether borrowers make timely mortgage payments, adding that it will likely take several quarters for the effects of the most recent storms on the survey results to dissipate.
MBA noted that significant delinquency increases were recorded in states adversely impacted by Hurricane Florence and Tropical Storm Gordon, including North Carolina, South Carolina, Mississippi, Arkansas, and Alabama.
"The impact of the August and September 2017 hurricanes on several states, particularly Texas and Florida, continues to retreat," Walsh said. "Primarily because of the declining effects of last fall's hurricane-related spike, the overall mortgage delinquency rate in the third quarter was down 41 basis points on a year-over-year basis."
