Smart Borrower Blog

Mortgage Delinquency Rates Drop as Jobs Scene Improves


May 17th, 2017 @ 2:19 PM by Amber Nelson


The delinquency rate on U.S. mortgage loans fell in the 2017 first quarter, according to the Mortgage Bankers Association, an indication that job creation and wage increases were helping homeowners get current on their loans.

During the first quarter, 4.71 percent of all outstanding mortgage loans on one- to four-unit residential properties were delinquent, a decline from 4.80 percent in the 2016 fourth quarter and down from 4.77 percent a year ago.

“Mortgage delinquencies decreased overall in the first quarter of 2017, driven by a drop in both the FHA and VA delinquency rates from the previous quarter as the conventional delinquency rate held constant,” said Marina Walsh, MBA Vice President of Industry Analysis. “Employment growth started 2017 on strong footing, with the economy adding 216,000 jobs in January 2017 and 232,000 jobs in February. Average hourly wage growth increased 2.8 percent over the year, and has maintained a generally increasing trend since late 2015. These fundamentals have helped to support the performance of all loan types – whether FHA, VA or conventional loans.”

New foreclosure actions moved upward, with 0.30 percent of all mortgage loans experiencing a new notice of foreclosure in the first quarter, up from 0.28 percent last quarter but down from 0.35 percent one year earlier.

“We saw an increase in foreclosure starts for the first time since the fourth quarter of 2014, but this increase was accompanied by a sizable drop in loans that were 90 days or more past due,” Walsh commented. “It is likely that legacy distressed loans were held in the late stage-delinquency bucket by factors such as resolution attempts and state-specific requirements, before eventually going into foreclosure status. All 50 states and the District of Columbia saw a decrease in the 90-day or more delinquency rate.”

Serious delinquencies – mortgage loans that are at 90 days or more past due – fell to a rate of 2.76 percent of all loans, a significant decline from 3.13 percent during the 2016 fourth quarter and a huge plunge from 3.29 percent the previous year. That trend is also likely a product of an improving economy and jobs market.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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