Mortgage Delinquency Rates Continue to Drop

By Taff Weinstein at

Mortgage Delinquency Rates Continue to Drop

In yet another sign of a stable and even vibrant housing market, more and more homeowners are current on their mortgage payments.

According to Black Knight Inc.'s First Look at January 2019 mortgage data, mortgage payment delinquencies continued to improve with a 3.45% drop month-over-month and a 12.93% decline year-over-year down to a rate of only 3.75% (based on loans 30 days or more past due but not in foreclosure). That represents a total of 1,945,000 homes.

The highest non-current percentages were in Mississippi (10.10%), followed by Louisiana (7.96%), Alabama (6.75%), West Virginia (6.42%), and Arkansas (6.04%). These states, except West Virginia, are also in the top 5 for serious (90+ days) delinquencies along with Delaware.

The states with the largest deterioration of non-current percentage in the past 6 months are DC, Nebraska, Illinois, South Dakota, and Iowa.

Colorado posted the smallest non-current percentage at 1.82% followed by Oregon (2.03%), Washington (2.15%), Idaho (2.20%), and Utah (2.45%).

Source: Black Knight First Look

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained just +10 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways compared to the previous week.

Overview:  Mortgage backed securities moved in a very well defined and tight range. We had strong housing data but the markets focused on the Fed and on Trade.  The Federal Reserve released their Minutes from their last FOMC meeting and it really didn't contain any surprises for bond traders.  Trade meetings in D.C. appeared to be making progress, particularly near the end of the week.

Taking it to the House: January Existing Home Sales came in at 4.94M units vs est of 5.00M. So a slight miss but December was upgraded from 4.99M to 5.00M. The median existing-home price for all housing types in December was $253,600, up 2.9 percent from December 2017 ($246,500). December’s price increase marks the 82nd straight month of year-over-year gains.  The February NAHB Housing Market Index was much stronger than expected, shooting up from 58 in Jan to 62 in Feb. The market was expecting a reading of 59. Any reading above 50.0 is positive. All regions, with the exception of the North East, had positive gains.

The Talking Fed: We got the Minutes from the last FOMC meeting. Here are a few highlights:
• Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year.
• The Fed will remain patient in light of ambivalent economic and market data.
• The Fed's outlook for the economy and the policy rate have both become more uncertain
• Keeping the current policy rate for now "posed few risks"
• As various Fed speakers noted recently, higher than expected inflation may be a requirement for more rate hikes
• The Fed was worried that the dot plot -which has become a Fed forecasting farce - is being "misinterpreted."
• Many participants commented that upward pressures on inflation appeared to be more muted than they appeared to be last year despite strengthening labor market conditions and rising input costs for some industries.

What to Watch Out For This Week:

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.


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