The association's seasonally adjusted delinquency rate for mortgages on one- to four-unit residential properties was 6.18%, down from 6.47% from the previous month. The non-seasonally adjusted rate decreased slightly from 7.03% in September to 6.75% in October.
However, while those numbers mark a month-on-month improvement, they are still substantially higher than they were during the same time in 2019. One year earlier, the non-seasonally adjusted delinquency rate was just 2.93%, and the seasonally adjusted rate was 3.07%.
The MBA attributed the increase in delinquencies to the pandemic-related recession, which has left many people unable to make their mortgage payments. The association noted that the unemployment rate remains high and some households are experiencing financial strain, which has led to an increase in delinquencies.
The October figures also show that the share of loans in forbearance decreased slightly from 8.49% in September to 8.31% in October. This is the third consecutive month-on-month decrease since the peak of 11.44% in July. However, the number of loan in forbearance is still four times higher than it was in March.
The MBA also reported that the percentage of loans on which foreclosure actions have been started during the past 12 months stood at 0.23%, unchanged from September. The rate is up significantly from 0.10% in October 2019.
Overall, while the mortgage delinquency rate has decreased slightly month-on-month, it is still far higher than it was in 2019 due to the economic upheaval caused by the pandemic. The MBA believes that the economy will continue to face challenges in the coming months as consumers continue to adjust to changes brought about by the crisis. The number of loans in forbearance has decreased in the past three months, but it is still substantially higher than it was pre-pandemic, reflecting the impact of the recession. Foreclosures have also increased, although the rate is still relatively low.
This article was contributed on Nov 07, 2023