The Mortgage Bankers Association’s (MBA) National Delinquency Survey revealed that the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 3.37% at the end of Q2 2023. This is a 19-basis point drop from Q1 and 27 basis points lower than one year ago.
The foreclosure action initiation rate in Q2 fell by 3 basis points to 0.13%. According to Marina Walsh, MBA’s vice president of industry analysis, the delinquency rate is at its lowest since the survey began in 1979.
Walsh attributed this decline to a resilient job market that has allowed homeowners to continue making mortgage payments. All mortgage types, including conventional, FHA, and VA loans, saw reduced delinquency rates.
However, Walsh also noted early signs of possible consumer credit stress, with delinquencies rising for other credit forms such as credit cards and car loans. FHA delinquencies also rose on a non-seasonally adjusted basis, indicating potential distress among homeowners with these loans as the economy slows and the labor market cools.
Details of the Survey:
- The 30-day delinquency rate fell by 2 basis points to 1.75%.
- The 60-day delinquency rate remained steady at 0.55%.
- The 90-day delinquency rate fell by 17 basis points to 1.07%.
By loan type:
- Conventional loans' total delinquency rate dropped 15 basis points to 2.29%, the lowest since 2004.
- The FHA delinquency rate decreased 32 basis points to 8.95%.
- The VA delinquency rate decreased 28 basis points to 3.70%, the lowest since Q4 2019.
Year-over-year, total mortgage delinquencies decreased for all loans. The percentage of loans in foreclosure at the end of Q2 was 0.53%, four basis points down from Q1 2023 and six basis points lower than a year ago.
The non-seasonally adjusted seriously delinquent rate reached its lowest level since Q2 2000 at 1.61%, a decrease of 12 basis points from last quarter and 51 basis points from last year.
Despite the overall positive trend, five states witnessed significant quarterly increases in their non-seasonally adjusted delinquency rate: Indiana (37 basis points), Michigan (35 basis points), Ohio (35 basis points), Pennsylvania (32 basis points), and Texas (31 basis points).
