Mortgage Delinquency Rate Climbs In Q1

The delinquency rate for mortgages on residential properties increased to 4.36 percent at the end of the first quarter, according to a Mortgage Bankers Association survey released Tuesday.

The MBA’s National Delinquency Survey found that the delinquency rate on one- to four-unit properties was up 59 basis points from the fourth quarter of 2019 and down 6 basis points from a year ago.

“The mortgage delinquency rate in the fourth quarter of 2019 was at its lowest rate since MBA’s survey began in 1979,” said Marina Walsh, MBA vice president of Industry Analysis. “Fast-forward to the end of March, and it is clear the COVID-19 pandemic is impacting homeowners.”

The survey found:

  • The percentage of loans on which foreclosure actions were started in the first quarter fell by 2 basis points to 0.19 percent. 
  • The seriously delinquent rate in the first quarter decreased by 9 basis points and was down 29 basis points from a year ago.
  • The foreclosure inventory rate – the percentage of loans in the foreclosure process – was at its lowest level last quarter since 1984 and were down 2 basis points from the previous quarter. 
  • The 30-day delinquency rate rose to 2.67 percent, a 50-basis-point increase that matches the third quarter of 2017 as the highest quarterly increase in the NDS series dating back to 1979.
  • The 60-day delinquency rate increased 7 basis points to 0.77 percent, and the 90-day or more past due delinquency bucket increased 3 basis points to 0.93 percent.

“Mortgage delinquencies track closely with the U.S. job market. With unemployment rising from historical lows in early 2020 to a record 14.7 percent in April, it is inevitable that mortgage delinquencies would increase as well,” said Walsh, who added that foreclosure rates may flatten due to the CARES Act.

The $2 trillion CARES Act includes a moratorium on foreclosures and the right to forbearance on federally backed mortgages during the coronavirus pandemic. Forbearance allows borrowers to put off payments for at least 180 days if they suffer economic hardship during the pandemic.

The MBA estimates that 4 million American homeowners were in forbearance plans as of May 3.