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Housing Market Snapshot: Delinquencies, Prepayments, and Refi Potential

Delinquency rates fell by 3.0% while foreclosures fell by 5.8% in May, according to the latest Black Knight Mortgage Monitor report. Additionally, the report states that prepayment rates are up by 24.3%. 

Black Knight states that delinquency rates have declined over the past 12 months in 41 states, plus the District of Columbia. Florida and Texas saw the strongest year-over-year declines, due to strong improvement in areas heavily impacted by the 2017 hurricane season. 

Colorado, meanwhile, held the lowest delinquency rates nationally, at 1.6%. Close behind Colorado are Oregon, Washington and California, as well as North Dakota and Idaho. 

By city, the West Coast dominates in low delinquency rates. Black Knight found that San Jose, San Francisco and Seattle rank numbers 1, 2 and 4 in terms of the nation's lowest delinquency rates, while Portland, Denver, San Diego and Sacramento also rank in the top 10. 

Black Knight’s data also reveals that May saw the lowest number of foreclosure starts in 18 years, at around 39,000, while the number of loans in active foreclosure fell to a more than 13-year low. The total non-current rate has fallen to to its lowest point since early 2005, driven by improvements in overall delinquencies.

Prepayments have been on the rise, and while prepayments among fixed-rate loans have hewed close to the overall market average, Black Knight found that adjustable rate mortgage (ARM) prepayment rates have jumped to their highest level since 2007. 

Black Knight’s mortgage monitor also covered refinances, and according to the report, as Freddie Mac’s 30-year average fixed rate fell to 3.73%, an additional 1.3 million borrowers gained refinance incentive, bringing the total number of refinance candidates to 8.2 million. According to Black Knight, this is the largest group since late 2016, and a 6.3 million increase from when rates peaked in November 2018.. 

“As of June 27th, there were 1.5M refinance candidates from the 2018 vintage alone, accounting for one of every six such candidates in the market, matching the total from the 2013-2017 vintages combined,” Black Knight stated.

Given the higher number of borrowers who can qualify for refinancing, the average savings per borrower is now around $266, an aggregate monthly savings of $2,194,000,000. 

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.

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