ICE Reports: Mortgage Delinquencies Low Despite Seasonal Increase, Concerns For FHA And VA Loans In 2023

Mortgage performance for November 2023 offered a mixed picture of the national mortgage market, according to a new report by Intercontinental Exchange, Inc. (ICE).

The report shows the national delinquency rate marginally increased to 3.39% in November, which is still 10 basis points lower than the same period last year, and significantly below pre-pandemic levels by 64 basis points. This indicates a generally healthy mortgage landscape, but certain segments show potential signs of stress.

A particular area of concern is the rate of delinquencies among FHA loans, which has hit a nine-year high, excluding the immediate aftermath of the pandemic. This trend, marking the highest rate since before 2014, warrants close observation in 2024, according to ICE.

Similarly, early-stage delinquencies in VA loans have reached their highest non-pandemic levels since 2009. The rise in interest rates appears to be affecting the performance of recently originated loans in this segment.

In contrast, GSE mortgages have shown more resilience. Early-stage delinquencies in this sector have remained relatively stable, and the overall delinquency rates are less than half the national average, standing at 1.51%.

Despite these variations, serious delinquencies, defined as 90-plus days past due, have decreased. The number of serious delinquencies dropped to 459,000, a 21% reduction (123,000 fewer cases) compared to November 2022.

Foreclosure activity also shows a downward trend. Foreclosure starts in November fell by 12.2% to 29,000, while the active foreclosure inventory declined to 216,000. Both these figures are over 20% lower than the levels seen in 2019.

Prepayment activity, however, continued its decline, influenced by seasonal patterns in homebuying and the aftereffects of 30-year mortgage rates climbing above 7.75% the previous month.