Q2 Mortgage Delinquency Rate Highest In 9 Years

Mortgage loans saw delinquency rates spiking in the second quarter of the year as the pandemic continued, according to a press release from the Mortgage Bankers Association (MBA).

The rates of delinquency for one- to four-unit residential properties hit 8.22 percent of all loans outstanding, a 386 basis points increase from the first quarter and 369 points higher than it was at the same time in 2019.

The survey considered loan payments delinquent if they had not been paid on the original terms from the mortgage, MBA said. The states with the largest increases in delinquency included New Jersey with 628 basis points, Nevada with 600, New York with 575, Florida with 569 and Hawaii with 525.

Marina Walsh, MBA’s vice president of Industry Analysis, said it “could not be more apparent” what an effect the pandemic had on the ability of many to pay their loans on time.

“The second quarter results also mark the highest overall delinquency rate in nine years, and a survey-high delinquency rate for FHA loans,” she said, according to the release. “There was also a movement of loans to later stages of delinquency, with the 60-day delinquency rate reaching a new survey-high, and the 90+-day delinquency rate climbing to its highest level since the third quarter of 2010.”

On a positive note, she said 30-day delinquencies had fallen during the second quarter, which means that the deluge of fresh ones could be evening out. Thirty-day delinquencies, statistics from the MBA showed, decreased 33 basis points in the second quarter and now sit at 2.34 percent.

However, the release noted that the 60-day delinquency rate increased 138 basis points to 2.15 percent, which was the highest rate since the survey began in 1979.

The delinquency rate usually looks at loans at least one payment past due, although not usually at loans in the process of foreclosure.

In separate news, Thomas Sponholtz, CEO of Unison, told PYMNTS he thinks there should be more options for financing home ownership, such as his company’s method of combining buying and ownership of debt and equity to help people feel more secure in their finances.