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Q1 Mortgage Delinquency Snapshot

As we approach hurricane season again, the impact of last year’s damaging storms are still being felt in the form of elevated 90+ day delinquency rates in some affected communities. According to the Mortgage Bankers Association's (MBA) National Delinquency Survey, four out of the top five states with the highest 90+ day delinquency rates in Q1 2018 were impacted by the hurricanes. Those states include Florida, Mississippi, Louisiana, and Texas. But how did the rest of the nation fair in Q1?

The National Delinquency Survey reports that “the delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally-adjusted rate of 4.63 percent of all loans outstanding at the end of the first quarter of 2018.” The delinquency rate dropped 54 basis points quarter-over-quarter, and also stood at eight basis points lower than a year prior.

"The strong economy, low unemployment rate, tax refunds and bonuses, and home price appreciation were key factors that helped push delinquencies down in the first quarter,” said Marina Walsh, MBA's VP of Industry Analysis. “Of course, there are offsetting factors that may put upward pressure on delinquency rates in future quarters, including: a difficult recovery for some borrowers in hurricane-impacted states; the aging of loan portfolios; higher interest rates that limit a borrower's rate-term refinance options; higher energy prices; stretching of housing affordability given limited supply; and the easing of credit overlays as mortgage market conditions have changed."

The FHA delinquency rate declined by 136 basis quarter-over-quarter, marking the largest single-quarter decline reported for the National Delinquency Survey data series. The overall mortgage delinquency rate increased by 93 basis points for FHA loans, dropped by 26 basis points for conventional loans, and increased 42 basis points for VA loans.

The report also found mortgage delinquencies decreasing across all stages of delinquency during Q1. Thirty-day delinquencies dropped by 27 basis points quarter-over-quarter, 60-day delinquencies dropped by 9 basis points, and 90-day delinquency dropped by 18 basis points.

The foreclosure inventory rate hit a low not experienced since Q3 2006. The percentage of loans in the foreclosure process at the end of Q1 was 1.16 percent, down 3 basis points from Q4 2017. The rate is also 23 basis points lower year-over-year.

To read the full MBA National Delinquency Survey, click here.

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected]

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