Despite June’s increase, first-time foreclosure starts in Q2 of 2016 were at their lowest level in over 16 years, according to a report conducted by Black Knight Financial Services. The report, The First Look at June 2016 Mortgage Data, showed foreclosure starts increased for second consecutive Month while the monthly prepay rate rose on historically low rates.
The total U.S. foreclosure pre-sale inventory rate was 1.10 percent for June with a month-over-month decrease of 2.57 percent and a year-over-year decrease of 29.35 percent. Likewise, total U.S. foreclosure starts numbered 69,300 for June with an increase of 11.59 percent month-over-month change and a 11.27 percent decrease year-over-year change.
Prepayment speeds, which are historically a good indicator of refinance activity, jumped to a 12-month high. This mirrored an overall rise in refinance activity driven by historically low interest rates. The monthly prepayment rate (SMM) is 1.44 percent from a 10.30 percent increase from the previous month, and a total increase of 3.24 percent from the prior year.
Early-stage delinquencies saw a seasonal increase in June. In contrast, 90-day delinquencies and foreclosure inventories continued to decline. The number of properties 30 or more days past due, but not in foreclosure increased by 25,000 from May 2016 to 2,178,000, but saw an overall decrease from the previous year of 237,000 properties. Likewise, the number of properties 30 or more days past due or in foreclosure numbered 2,736,000 and saw an increase of 9,000 from May 2016, despite a year-over-year decrease of 468,000 properties. Additionally, the number of properties that are 90 or more days past due, but not in foreclosure fell by 27,000 properties from May to 692,000 in June with an overall year-over-year decrease of 161,000 properties.
The number of properties in foreclosure pre-sale inventory numbered 558,000 with a decrease of 16,000 properties from last month as well as a decrease from the previous year of 231,000 properties. Finally, the report noted that non-current rates have increased during the past six months for Wyoming, North Dakota and Alaska. This have been attributed to oil and gas woes impact to mortgage performance.