The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased 11 basis points to a seasonally adjusted rate of 4.66% of all loans outstanding at the end of the second quarter of 2016, according to the Mortgage Bankers Association National Delinquency Survey.
The delinquency rate was 64 basis points lower than one year ago and at its lowest level since the second quarter of 2006, according to an MBA news release about the survey.
The percentage of loans on which foreclosure actions were started during the second quarter was .32%, a decrease of three basis points from the previous quarter and down eight basis points from a year ago. The foreclosure starts rate was at its lowest level since the second quarter of 2000, according to the release.
“Mortgage performance improved again in the second quarter primarily because of the combination of lower unemployment, strong job growth and a continued nationwide housing market recovery,” Marina Walsh, MBA’s vice president of industry analysis, said in the news release. “The mortgage delinquency rate tracks closely with the nation’s improving unemployment rate. In the second quarter of 2016, the mortgage delinquency rate was 4.66%, while the unemployment rate was 4.87%. By comparison, at its peak in the first quarter of 2010, the delinquency rate was 10.06% and the unemployment rate stood at 9.83%.
“In addition, the delinquency rate of 4.66% for the second quarter of 2016 was lower than the historical average of 5.36% for the time period 1979 to the present,” she said in the release. “Among the various loan types, the delinquency rate improved for conventional loans as well as FHA loans. The FHA delinquency rate dropped to 8.46%, its lowest level since 2000.”
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 second quarter was 1.64%, down 10 basis points from the previous quarter and 45 basis points lower than one year ago, according to the release. The foreclosure inventory rate was at its lowest level since the second quarter of 2007.
The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 3.11%, the lowest level since the third quarter of 2007, according to the release.
Forty-seven states either had no change or saw declines in the foreclosure inventory rate in the second quarter of 2016, according to the release. New Jersey and New York had the highest percentage of loans in foreclosure at 5.97% and 4.48%, respectively. Florida’s percentage of loans in foreclosure dropped to 2.72%, a significant improvement over 2011 when the state had nation’s highest percentage of loans in foreclosure at 14.49%, the release stated. California’s percentage of loans in foreclosure was .66%, the eighth lowest among all states, according to the release.
The full MBA release is available at https://www.mba.org/2016-press-releases/august/delinquencies-and-foreclosures-continue-to-drop.