ICE First Look at November Mortgage Performance: Delinquencies Historically Low Despite Seasonal Rise; Performance of Recent Originations Worth Watching
- None.
- Serious delinquencies rose to 459K, Foreclosure starts decreased -12.2% in November to 29K, Prepayment activity fell under continued pressure from seasonal homebuying patterns along with the residual effects of 30-year rates climbing above 7.75% the month prior.
The uptick in the national delinquency rate to 3.39% and the elevated rate among FHA loans signal potential stress in the housing market. This is noteworthy as FHA loans are often utilized by first-time homebuyers and those with lower credit scores. The 9-year high in delinquency rates for FHA loans could indicate broader economic challenges, such as job market instability or wage stagnation, which may affect consumer spending and overall economic growth.
Furthermore, the increase in early-stage delinquencies among VA loans suggests that rising interest rates are beginning to affect homeowners, particularly those with recent loan originations. This could lead to a contraction in new mortgage originations and might impact the revenue streams of mortgage lenders and service providers.
The resilience of GSE mortgages, with delinquency rates well below the national average, highlights the relative stability of this segment. However, the rise in serious delinquencies, despite being lower year-over-year, requires monitoring as it could lead to increased foreclosure rates in the future.
From an investment standpoint, the data provided could influence the valuation of mortgage-backed securities and the stocks of companies in the housing and financial sectors. Market participants might adjust their risk assessments for portfolios with exposure to residential mortgages. Additionally, the decrease in prepayment activity, influenced by higher interest rates, may affect the expected returns from mortgage-backed securities.
The regional disparities in delinquency rates, with states like Mississippi and Louisiana having higher rates, could reflect localized economic conditions or property market dynamics. These variations are critical for investors and policymakers to understand regional market risks and potential opportunities for intervention or investment.
Moreover, the decline in foreclosure starts and active foreclosure inventory suggests a continuing recovery from the pandemic's peak levels of financial distress. This recovery is uneven, though and the long-term effects of the pandemic on the housing market, including potential shifts in housing demand and supply, remain to be fully seen.
The overall decrease in non-current loans year-over-year demonstrates a healing housing market, but the month-over-month increase could be a sign of emerging stress. This could have implications for local economies, the construction industry and financial institutions with significant mortgage portfolios.
The provided data can be used to forecast future real estate market conditions and to develop strategies for real estate investment trusts (REITs), mortgage lenders and policy decisions regarding housing market interventions.
The data on mortgage performance is a key indicator of the health of the housing finance system and the broader economy. The decline in prepayment rates is indicative of a less active housing market and lower loan refinancing activity due to higher interest rates. This has implications for mortgage servicers and the refinancing market, potentially leading to reduced revenues and a shift in market strategies.
As serious delinquencies have increased, mortgage servicers and investors should prepare for a potential uptick in loss mitigation activities. This could include an increase in loan modifications, short sales, or foreclosures, which would affect the costs and operational focus of these entities.
The data also provides insight into the credit quality of new loan originations and the effectiveness of underwriting standards, which are critical for the development of credit risk models and the pricing of mortgage products. Lenders may need to adjust their underwriting criteria and product offerings in response to these trends.
Overall, the mortgage performance statistics serve as a barometer for the mortgage industry, influencing lending practices, investment decisions and regulatory oversight.
-
The national delinquency rate edged higher to
3.39% in November – down 10 basis points (bps) from the same time last year – but remains 64 bps below pre-pandemic levels - While delinquencies remain low overall, the rate among FHA loans is now at a 9-year high – excluding the immediate aftermath of the pandemic – and will be worth watching closely in 2024
- Likewise, early-stage delinquencies among VA loans hit their highest non-pandemic levels since 2009, as rising interest rates have begun to impact performance among recently originated loans
-
GSE mortgages have been more resilient, with early-stage delinquencies holding stronger and overall delinquency rates less than half the national average at
1.51% -
Serious delinquencies (90+ days past due) rose to 459K, but remain down 123K (-
21% ) from November 2022 -
Foreclosure starts decreased -
12.2% in November to 29K with active foreclosure inventory falling to 216K, some23% and24% below 2019 levels respectively -
Prepayment activity fell again under continued pressure from seasonal homebuying patterns along with the residual effects of 30-year rates climbing above
7.75% the month prior
Data as of Nov. 30, 2023
Total |
Month-over-month change: |
Year-over-year change: - |
|
Total |
Month-over-month change: - |
Year-over-year change: - |
|
Total |
Month-over-month change - |
Year-over-year change: |
|
Monthly prepayment rate (SMM): |
Month-over-month change: - |
Year-over-year change: - |
|
Foreclosure sales: 6,500 |
Month-over-month change: |
Year-over-year change: |
|
Number of properties that are 30 or more days past due, but not in foreclosure: 1,804,000 |
Month-over-month change: 70,000 |
Year-over-year change: -24,000 |
|
Number of properties that are 90 or more days past due, but not in foreclosure: 459,000 |
Month-over-month change: 12,000 |
Year-over-year change: -123,000 |
|
Number of properties in foreclosure pre-sale inventory: 216,000 |
Month-over-month change: -1,000 |
Year-over-year change: -16,000 |
|
Number of properties that are 30 or more days past due or in foreclosure: 2,020,000 |
Month-over-month change: 69,000 |
Year-over-year change: -39,000 |
Top 5 States by Non-Current* Percentage |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bottom 5 States by Non-Current* Percentage |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Top 5 States by 90+ Days Delinquent Percentage |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Top 5 States by 12-Month Change in Non-Current* Percentage |
||
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
Bottom 5 States by 12-Month Change in Non-Current* Percentage |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state. |
||
Notes:
- Totals are extrapolated based on Black Knight’s loan-level database of mortgage assets.
- All whole numbers are rounded to the nearest thousand, except foreclosure starts and sales, which are rounded to the nearest hundred.
NOTE: Due to the holidays ICE Mortgage Monitor will not publish a report in January. Reports for previous months are available online at https://www.blackknightinc.com/data-reports/. The next ICE Mortgage Monitor will publish February 5, 2024.
For more information about gaining access to ICE’s loan-level database, please send an email to Mortgage.Monitor@bkfs.com.
About Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges – including the New York Stock Exchange – and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 – Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on February 2, 2023.
Category: Mortgage Technology
ICE-CORP
Source: Intercontinental Exchange
View source version on businesswire.com: https://www.businesswire.com/news/home/20231221752393/en/
ICE Media Contact
Mitch Cohen
mitch.cohen@bkfs.com
+1 704-890-8158
ICE Investor Contact:
Katia Gonzalez
katia.gonzalez@ice.com
+1 (678) 981-3882
Source: Intercontinental Exchange
