The rate of delinquency on mortgages for residential real estate with one to four apartments fell in the second quarter to 5.47%, according to the data Mortgage Bankers Association review posted this week.
Compared with previous quarterarrears fell 91 basis points and a whopping 275 basis points from last year.
The results are welcome news and run counter to care it became known last year that the increased level of delinquency will lead to many cases of foreclosure. This prediction is no longer true.
According to the MBA, the category of greatest concern at the start of the pandemic was 90-day delinquency, which fell 72 basis points to 3.53% in the second quarter (a record decline).
Meanwhile, the 30-day delinquency rate dropped 4 basis points to 1.41%, and the 60-day delinquency rate fell 15 basis points to 0.52%. Both segments are at the lowest level in the history of the study, according to the trading group.
Marina Walsh, vice president of industry analysis for the MBA, noted the recovery is being driven by several factors “Including improved employment and other economic conditions, the availability of exercise options for keeping home after abstinence, and a strong housing market that offers additional alternatives for disadvantaged homeowners.”
According to the MBA, by category of loans, the overall delinquency rate on conventional loans decreased by 68 basis points compared to the previous quarter to 3.89%. While the FHA and VA loan delinquency rates also fell from the previous quarter to 12.77% (down 190 basis points) and 6.47% (down 115 basis points), respectively.
Walsh noted that mortgage delinquencies for all three types of loans hit their lowest levels since the first quarter of 2020, and FHA loans and VA loans experienced the largest quarterly decline in MBA research history (which dates back to 1979).
The study found that the percentage of foreclosed loans at the end of the second quarter fell slightly to 0.51%, down 3 basis points from the first quarter and 17 basis points lower than last year.
The states with the largest declines in overall delinquency rates from the previous quarter were Idaho (152bps), Nevada (105bps), Florida (94bps), Hawaii (81bps) and New Jersey (85 bp).
Walsh added that the foreclosure moratorium, which was still in effect in the second quarter, resulted in the lowest foreclosure inventory recorded since 1981.
“Once the foreclosure moratorium and 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,” she said.