The national mortgage delinquency rate fell by 7 basis points (bps) in October to 3.34%, down 11% year-over-year and down 53 bps from the October 2019 pre-pandemic benchmark, according to a data report from ICE Mortgage Technology, a division of Intercontinental Exchange, Inc. (NYSE: ICE). Both early-stage (30-day) and late-stage (90+ day) delinquencies declined last month.
But while delinquencies were down, foreclosure activity trended. October’s foreclosure starts slowed by 9.8% from the prior month, but the foreclosure inventory was up by 37,000 (19%) year-over-year and foreclosure sales have increased by 1,900 (32%) from last year’s levels. The increases were driven by a spike in FHA foreclosures (up 50% year-over-year) and a resumption of VA activity following last year’s moratorium.
ICE also noted the single month mortality (SMM) rate, which tracks prepayments, rose by 27 bps in October to 1.01%. This is the highest level in 3.5 years and an increase of 16 bps from last year when interest rates were at similar levels.
“Softening mortgage rates expanded the pool of refinance candidates in October, pushing prepayments to their highest level in three and a half years,” said Andy Walden, head of mortgage and housing market research at ICE. “This trend was largely driven by people who purchased homes at elevated rates in recent years seizing the opportunity to lower their monthly payments. Overall mortgage health remains solid, with continued improvement in delinquency rates across all stages. While foreclosure activity has ticked up, levels remain historically low.”
