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Housing Market Health Exemplified by Low Foreclosures and Delinquencies

Foreclosure-Four-BH-300x198Mortgage servicing professionals are looking at the lowest foreclosure numbers in more than a decade. Foreclosure starts from October 2016 have fallen to their lowest level since January 2005, according to the month-end mortgage performance report curated by Black Knight Financial Services, Inc.

National mortgage numbers experienced a staggering change from September to October. According to Black Knight, there were approximately 56,500 foreclosure starts in October, the lowest one-month total in nearly 12 years. The low number of foreclosure starts represented an 8 percent decline from September and a 22 percent decline from the previous October.

Ben Graboske, EVP of Data & Analytics at Black Knight, attributes the low number of foreclosure starts to home price appreciation and employment gains.

“At a high level, the current low in foreclosure starts reflects the continuation of a trend of recovery from the great recession,” he said. “Both U.S. housing and the overall economy are very healthy. In particular, home price appreciation and employment strength are two of the largest contributors to this continued trend.”

A large number of missed mortgage payments had a significant impact on October’s performance numbers. The report discusses loan delinquency,  or the number of mortgage loans payments that are 30 or more days past due, but not in foreclosure. Statistics show that the U.S. loan delinquency rate is at 4.35 percent, which is a 1.84 percent month-over-month increase from September. The national delinquency rate is still down 9 percent from October 2015. The five states with the highest percentage of loans 90 or more days delinquent are Mississippi (3.43), Louisiana (3.05), Alabama (2.37), Arkansas (2.06), and Tennessee (1.95).

Graboske states that rising ARM lending rates, increasing interest rates, and the job market will play pivotal roles in the mortgage outlook for 2017.

“Increasing interest rates tend to reduce the refinance share of the market, specifically in higher credit segments, which typically outperform their purchase mortgage counterparts,” Graboske said. “We also typically see a rise in ARM lending as rates rise, which could in turn have a dampening effect on mortgage performance. That being said, we would still expect the overall trend of declining delinquencies and reduction in foreclosure inventory to continue throughout 2017 barring some unforeseen macroeconomic impacts. Significant job losses could slow or reverse this healthy trend, and such a scenario would be further exacerbated should substantial home price depreciation set in. At this point, neither of those factors seem likely to occur in 2017.”

To view the full report, click here.

About Author: Mirasha Brown

Mirasha Brown is a graduate of Florida A&M University and is pursuing a masters degree at Syracuse University. Born and raised in Florida, she has contributed to public relations and marketing campaigns for Rent The Runway and Billboard. She is a communications specialist with The Five Star and a contributing writer to DS News and the MReport.

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