A survey of fourth-quarter mortgage delinquencies affirmed the persistence of a worrying trend, the latest figures from the Mortgage Bankers Association (MBA) show.
As conventional delinquency rates “remain near historical lows,” government delinquency rates continue to grow, widening the spread between the two.
In the fourth quarter, the total delinquency rate for conventional loans decreased by 1 basis point to 2.62% from the previous quarter, while the FHA delinquency rate increased 57 basis points to 11.03%, and the VA delinquency rate increased 12 basis points to 4.7%.
The overall delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.98% of all loans outstanding at the end of the fourth quarter of 2024, the MBA’s National Delinquency Survey shows.
That represents a 6 basis-point rise quarterly and 10 basis-point rise from the fourth quarter of 2023 for the total delinquency rate. By loan type, delinquency rates increased by 1 basis point for conventional loans, 22 basis points for FHA loans, and 63 basis points for VA loans on a yearly basis.
“Although mortgage delinquencies rose only ten basis points in the fourth quarter of 2024 compared to one year ago, the composition of the delinquencies changed,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Conventional delinquencies remain near historical lows, but FHA and VA delinquencies are increasing at a faster pace.”
The spread between FHA and conventional delinquency rates reached 841 basis points by the end of the fourth quarter, while the VA and conventional spread was 208 basis points.
“Government loans are also rolling to later stages of delinquency,” Walsh added. “Compared to one year ago, the seriously delinquent rate rose seventy basis points for FHA loans and fifty-seven basis points for VA loans, but only two basis points for conventional loans.”
Economic headwinds including inflationary pressures, natural disasters, lower personal savings rates, increasing consumer debt, and rising escrow costs for insurance and property taxes were cited as factors potentially contributing to higher delinquency rates with government borrowers.
“All of these factors may be impacting government borrowers to a greater extent than conventional borrowers,” the MBA’s report read.
States that experienced the largest quarterly increases in overall delinquency rates were Florida (+99 basis points), South Carolina (+59 basis points), North Carolina (+40 basis points), Georgia (+39 basis points), and Louisiana (+32 basis points).
