Decrease in delinquency on mortgages in Q2 2021

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Arrears on residential mortgages with one to four apartments declined to a seasonally adjusted 5.47% of all outstanding loans at the end of the second quarter of 2021, according to data Mortgage Bankers Association(MBA) National Crime Study.

For research purposes, the MBA asks service providers to report loans subject to abstinence as late if payment was not made based on the original mortgage terms. Arrears fell 91 basis points from the first quarter of 2021 and 275 basis points from a year ago.

“Mortgage delinquencies across all loan types — conventional, FHA and VA — are at their lowest level since Q1 2020,” said Marina Walsh, CMB, MBA vice president of industry analysis. “The decline in FHA and VA loan delinquencies was the largest quarterly decline for both in the history of the 1979 MBA study.”

“To a large extent, the improvement in the second quarter can be attributed to late loans in the later stages – in those 90 days or delinquency, but not in the loss of foreclosures,” adds Walsh. “In fact, the 90-day delinquency rate fell 72 basis points, another record drop in the study. Borrowers in the later stages of late payment appear to be recovering due to several factors, including improved employment and other economic conditions, the availability of home recovery options after abstinence, and a strong housing market that provides additional alternatives to troubled homeowners. ”

Walsh noted that the foreclosure moratorium was still in effect in the second quarter, which resulted in the lowest foreclosure inventory since 1981.

“Once the foreclosure moratorium is lifted and the abstinence plans expire over the next few months, we expect many homeowners to take advantage of the exercise options available to avoid the foreclosure process,” says Walsh.

Compared to the first quarter of 2021, the seasonally adjusted mortgage delinquency rate has decreased for all outstanding loans. Gradually, the 30-day arrears rate fell by 5 basis points to 1.41%, and the 60-day arrears rate fell 15 basis points to 0.52%, which is the lowest level in the history of the study. The 90-day arrears fell 72 basis points to 3.53%.

By type of loans, the overall rate of non-performing loans declined by 68 basis points to 3.89% quarter-on-quarter. The FHA overdue rate fell 190 basis points to 12.77%, while the VA overdue rate fell 115 basis points to 6.47%. For each of these three types of loans, the delinquency rate reached its lowest level since the first quarter of 2020.

On an annualized basis, the total amount of mortgage loan delinquencies decreased for all outstanding loans. The delinquency rate was down 279 basis points for conventional loans, down 288 basis points for FHA loans and 158 basis points for VA loans compared to the previous year.

View full survey results here

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