The delinquency rate hit an 18-year low for mortgage loans on one-to-four-unit residential properties in the fourth quarter of 2018, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
The results indicated a drop of 41 basis points from the previous quarter’s delinquency rate to a seasonally-adjusted rate of 4.06 percent of all loans outstanding at the end of the fourth quarter of 2018. That rate is 111 basis points down from one year prior.
“The overall national mortgage delinquency rate in the fourth quarter was at its lowest level since the first quarter of 2000,” MBA Vice President of Industry Analysis Marina Walsh said in a press release. “What’s even more noteworthy, the delinquency rate dropped from the previous quarter and on a year-over-year basis across all loan types and stages of delinquency.”
“With the unemployment rate near a 50-year low, wage growth trending higher and household debt levels relative to disposable incomes at a 35-year low, homeowners are in great shape, and mortgage performance is quite strong,” Walsh added.
Walsh pointed out that the fourth quarter saw improvements in states adversely impacted by natural disasters these last two years. For example, the delinquency rate in Florida dropped 458 basis points on a year-over-year basis, once the effects of Hurricane Irma dissipated, he said. Similarly, the delinquency rate in Texas dropped 218 basis points in the fourth quarter from a year ago, once the effects of Hurricane Harvey dissipated. States affected by more recent storms such as North Carolina, South Carolina, Mississippi, Arkansas and Alabama showed improvements at the end of last year, after experiencing delinquency spikes in the third quarter.
“Florida’s Hurricane Michael in October, as well as the California fires in November, have had limited impact on the overall delinquency rates in those states,” Walsh said.
MBA also noted that the percentage of loans on which foreclosure actions were started in the fourth quarter increased by two basis points to 0.25 percent from the third quarter to the fourth. Walsh said that fact likely could be attributed to the lifting of foreclosure moratoriums in states impacted by natural disasters, combined with severely delinquent loans that have finally moved into the foreclosure process – particularly those loans in judicial states where foreclosure procedures are much slower moving.