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The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.88% of all loans outstanding during the fourth quarter of 2023, according to new data from the Mortgage Bankers Association (MBA).

The fourth quarter’s delinquency rate was up 26 basis points from the third quarter but down 8 basis points from one year earlier. The historical average for the seasonally adjusted mortgage delinquency rate from 1979 through 2023 is 5.25%.

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

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). The percentage of loans on which foreclosure actions were started in the fourth quarter remained unchanged at 0.14%.

“Mortgage delinquencies increased across all product types for the second consecutive quarter,” said Marina Walsh, MBA’s vice president of industry analysis. “While the overall delinquency rate is still very low compared to the historical average, the pace of new loans entering delinquency picked up and some loans moved into later stages of delinquency. The resumption of student loan payments, robust personal spending, and rising balances on credit cards and other forms of consumer debt, paired with declining savings rates, are likely behind some borrowers falling behind at the end of 2023.”

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