US Mortage Delinquency Rate Increases in Q4

On Thursday, the Mortgage Bankers Association (MBA) released its latest National Delinquency Survey. The 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 Q4.

The delinquency rate was up 6 basis points from Q3 and up 10 basis points from one year earlier. The percentage of loans on which foreclosure actions were started in Q4 rose by 1 basis point to 0.15%.

In remarks accompanying the report, MBA Vice President of Industry Analysis Marina Walsh said:

“Although mortgage delinquencies rose only ten basis points in Q4 compared to one year ago, the composition of the delinquencies changed. Conventional delinquencies remain near historical lows, but FHA and VA delinquencies are increasing at a faster pace. By the end of Q4, the spread between the FHA and conventional delinquency rates reached 841 basis points, while the VA and conventional spread was 208 basis points.”

Government loans are also rolling to later stages of delinquency. Compared to one year ago, the seriously delinquent rate rose 70 basis points for FHA loans and 57 basis points for VA loans, but only two basis points for conventional loans.”

According to Walsh, while the labor market remains relatively strong and often tracks with mortgage performance, some of today’s headwinds include inflationary pressures, lower personal savings rates, natural disasters, increasing consumer debt, higher tax and insurance payments, and higher debt-to-income ratios. All of these factors may be impacting government borrowers to a greater extent than conventional borrowers.