Data released by the Mortgage Bankers Association (MBA) indicates that the delinquency rate for mortgage loans on one-to-four-unit residential properties, considered single-family properties, decreased to a not seasonally adjusted rate of 5.69% of all loans outstanding at the end of the first quarter of 2014, 106 basis points below the 6.75% delinquency rate recorded in the first quarter of 2013. This level represents the lowest level since the first quarter of 2008.
According to MBA’s National Delinquency Survey, the four-quarter decrease in the delinquency rate reflected a decline across each stage of delinquency. In addition, the foreclosure inventory also fell. As Figure 1 below illustrates, the percentage of all loans past due fell by 106 basis points over the past four quarters. Loans 30-59 days past due fell by 45 basis points, loans 60-89 days past due fell by 15 basis points, and loans 90 or more days past due decreased by 45 basis points. The foreclosure inventory fell by 90 basis points over the past four quarters. In sum, the serious delinquency rate, the portion of loans either 90 or more days late or in the foreclosure inventory decreased by 135 basis points over the past year.
The recent four-quarter decline in the portion of loans that are seriously delinquent furthers a trend in place since 2010. Figure 2 compares the share of loans that became seriously delinquent based on their origination year with the annual average serious delinquency rate. According to this illustration, the share of single-family loans considered seriously delinquent peaked in 2010 at 9.0%. Since 2010, the proportion of seriously delinquent mortgages has fallen to 5.8%.
The extended decline in the percentage of loans considered seriously delinquent partially reflects a decrease in serious delinquency among loans originated in more recent years. According to the figure below, an average of 4.0% of loans originated in 2005 became seriously delinquent. However, 10.6% of loans originated in 2006, 11.5% of loans originated in 2007, and 6.4% of loans originated in 2008 ultimately became seriously delinquent. In contrast, 1.0% of loans originated in 2009 became seriously delinquent. Since 2010, less than 1.0% of originated loans have become seriously delinquent.