American homeowners are doing better at paying their mortgages on time, according to the latest data from the Mortgage Bankers Association, with delinquencies falling to their lowest levels in almost 8 years.
The MBA’s National Delinquency Survey found that delinquencies – loans that were at least one payment behind but not yet in the foreclosure process – fell to a seasonally adjusted rate of 5.54 percent of all mortgage loans in the first quarter of this year, up from 5.68 percent during the previous quarter and up from 6.11 percent the year before. The rate has not been that low since the second quarter of 2007.
Joel Kan, MBA Associate Vice President of Industry Surveys and Forecasting, said the falling delinquency rate was due to better economic conditions for homeowners. “The job market continues to grow, and this is the most important fundamental improving mortgage performance,” he said. “Additionally, home prices continued to rise, as did the pace of sales, thus increasing equity levels and enabling struggling borrowers to sell if needed.”
Even the delinquencies among those far behind on their mortgages improved in the first quarter. The serious delinquency rate – the percentage of loans that are 90 days late or more or in the foreclosure process – fell to 4.24 percent, down from 4.52 percent in the fourth quarter of 2014 and down from 5.04 percent from a year earlier.
“Legacy loans continue to account for the majority of all troubled mortgages,” Kan added. “Within loans that were seriously delinquent, 73 percent of those loans were originated in 2007 or earlier, even as the overall rate of serious delinquencies for those cohorts decreases. More recent loan vintages, specifically loans originated in 2012 and later, continue to exhibit low serious delinquency rates.”