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  • Jonathan Poyer

What Hardships? Mortgage Delinquencies At An All-Time Low in March

Black Knight has published some really cool information and insights on the housing market with a special focus on delinquencies: HERE

With a focus on delinquencies, the housing market looks fantastic. Homeowners today are spending on average $6,000 less a year (adjusted for inflation) on their mortgage payments from 1990:

Home prices are appreciating at a pretty torrid pace and seems to be doing so across geographies and demographics:

At the same time, as the 30-year mortgage rate has picked up significantly in 2022, we have started to see payment to income ratios make housing “less affordable” in general although historically housing is relatively affordable as wages have increased. We will keep an eye on inflation and the general economy for purchasing power:

Pulling some data directly from the Black Knight report:

“The national delinquency rate dropped by more than half a percentage point in March, falling to 2.84% and shattering the previous record low of 3.22% in January 2020”:

Other interesting tidbits:

  • While March typically sees the strongest mortgage performance of any month – with delinquencies falling more than 10% on average over the past 20 years – this year’s 15.5% reduction was exceptionally strong

  • Robust employment, continued student loan deferrals, strong post-forbearance performance and millions of refinances into record-low interest rates have all helped put downward pressure on delinquency rates

  • The strongest improvement was seen among borrowers who are a single payment past due, with 30-day delinquencies recording a 20% month-over-month decline

  • Though serious delinquencies – those 90 or more days past due but not in foreclosure – fell 12% for the strongest single-month improvement in 20 years, they remain 70% above pre-pandemic levels

  • Despite elevated serious delinquencies, foreclosure starts fell by 3% from the month prior and are holding well below pre-pandemic levels

  • The number of active foreclosures edged slightly higher in March, marking the first year-over-year increase in almost 10 years, though inventories also remain well below pre-pandemic levels

  • Prepayment activity bucked the recent trend of sharply rising interest rates driving falling prepay speeds, rising by 9% in March, likely driven at least in part by seasonal increases in home sales-related prepays

The fundamental structures of the housing market are strong and actually continuing to improve. However, as rates rise housing affordability and the use of a home as a piggy-bank or liquidity source will drastically change and we will see how this all impacts purchasing power and the macro-environment.

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