September 24, 2019
With perhaps the best housing market in the United States in the past decade, numerous trends have emerged out of an extended period of low mortgage rates.
In addition to the boom in refinancing and mortgage prepayments, the country is also seeing a steep decline in foreclosures.
A recent look at loan performance data from market analyst Black Knight shows that foreclosure starts in August fell to their lowest total since 2000. A more global look at foreclosure inventory shows a similar decline.
The number of loans in active foreclosure, i.e. the foreclosure inventory, fell to 253,000, slightly less than a half percent of all mortgaged properties. This is 5,000 fewer than in July and down 28,000 loans from the level in August 2018. The inventory is now the smallest it has been since 2005. -- Via Mortgage News Daily
Notably, the number of mortgages that were 30 or more days past due actually rose by 6,000 from July to August. Year-to-year, that number was up 4,000, but because there has been an increase in outstanding mortgages nationally, the delinquency rate has fallen by 0.15%.
Serious delinquencies of 90 days or more stood at 444,000, marking a decrease of 62,000 over the last year.
One of the major reasons for this trend has been lower mortgage rates, which have allowed homeowners to refinance under terms that enable them to keep better pace with their payments. Prepayments have also allowed homeowners to get ahead on their mortgages.
Black Knight believes the data on foreclosures and delinquencies illustrates just how sensitive the U.S. housing market is to even the slightest changes in mortgage rates, which have been bouncing back up over the last two months, though they still remain low.
These slight changes can make or break whether larges segments of the U.S. population qualify for refinancing and have a high incentive to do so. If rates return to higher levels, we could see a return in foreclosure activity among those who would otherwise have avoided it if they could obtain a better rate.