Mortgage Delinquency Rate Continues to Rise

SAN DIEGO—CRE delinquency rates are rising dramatically for office, according to Jamie Woodwell, vice president and head of CRE research at the Mortgage Bankers Association.  That likely is not a surprise to observers but as Woodwell released the national delinquency rate survey MBA conducted, he emphasized that this is a huge industry, and not only are the property types performing differently, but within them, they are all different. “Each property is different, each owner is different and you cannot paint a broad breaststroke,” he said.

The delinquency rate was up 26 basis points from the third quarter of 2023 but down 8 basis points from one year ago, explained Woodwell. The historical average for the seasonally adjusted mortgage delinquency rate from 1979 through 2023 is 5.25 percent. Of particular note, FHA delinquencies were up 131 basis points, the MBA survey says. The  delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.88 percent of all loans outstanding at the end of the fourth quarter of 2023.

The percentage of loans on which foreclosure actions were started in the fourth quarter remained unchanged at 0.14 percent, the MBA survey says.

Other Key findings of MBA’s Fourth Quarter of 2023 National Delinquency Survey are as follows:

• Compared to last quarter, the seasonally adjusted mortgage delinquency rate increased for all loans outstanding. By stage, the 30-day delinquency rate increased 7 basis points to 2.10 percent, the 60-day delinquency rate increased 11 basis points to 0.73 percent, and the 90-day delinquency bucket increased 7 basis points to 1.05 percent.

• By loan type, the total delinquency rate for conventional loans increased 11 basis points to 2.61 percent over the previous quarter. The FHA delinquency rate increased 131 basis points to 10.81 percent, the highest level since the third quarter of 2021. The VA delinquency rate increased by 31 basis points to 4.07 percent.

• On a year-over-year basis, total mortgage delinquencies decreased for all loans outstanding. The delinquency rate decreased by 17 basis points for conventional loans, increased 20 basis points for FHA loans and decreased 9 basis points for VA loans from the previous year.

• The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.47 percent, down 2 basis points from the third quarter of 2023 and 10 basis points lower than one year ago. This is the lowest foreclosure inventory rate since fourth quarter of 2021.

• The non-seasonally adjusted seriously delinquent rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 1.52 percent, matching the lowest level since 1984.  It remained unchanged from last quarter and  decreased by 37 basis points from last year. Compared to a year ago, the seriously delinquent rate decreased by 26 basis points for conventional loans, decreased 98 basis points for FHA loans and decreased 42 basis points for VA loans.

• The five states with the largest quarterly increases in their overall delinquency rate were: Louisiana (77 basis points), West Virginia (53 basis points), Illinois (44 basis points), Texas (44 basis points), and New Mexico (42 basis points).