The national mortgage delinquency rate rose in June after hitting consecutive record lows in each of the previous three months.
The overall delinquency rate rose nine basis points to 2.84% in June, according to Black Knight. The delinquency rate is 35% lower than the same period last year and remains 30% below pre-pandemic levels.
A total of 1.51 million properties were in early-stage delinquencies, defined as borrowers who missed a single mortgage payment, which is a 5% increase from May.
“Early-stage delinquencies have been gradually rising over the past year and a half – ever since hitting record lows early in the pandemic, as borrowers availed themselves of forbearance options,” said Andy Walden, vice president of enterprise research and strategy at Black Knight.
Some 599,000 properties were considered seriously delinquent, in which loan payments are more than 90 days past due, but not in foreclosure. That metric broke a 21-month streak of improvement with a 1% uptick from the prior month.
Mississippi had the highest rate of serious delinquency of 2.43% in June. Louisiana followed at 2.11% and Alabama was third at 1.77%.
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Foreclosure starts were also up 27% to 23,800 in June, representing the highest share of serious delinquency at 4% since March 2020.
“Foreclosure starts increased due to a modest rise in the share of serious delinquencies being referred to foreclosure,” said Walden. While foreclosure starts were up in June and far above the near standstill of activity in 2020 and 2021, they still remain well below pre-pandemic levels.
Active foreclosure inventory rose by 16,000 last month as volumes continue to slowly come off the record lows brought on by widespread moratoriums and forbearance protection in 2020 and 2021, according to Black Knight.
Prepayment activity fell by 7% in June from May with prepays now down 64% from the same time last year as rising rates put downward pressure on both purchase and refinance lending.
Purchase mortgage rates exceeded the 5% mark this year compared with rates at the 2% level in 2021. With rising rates, the loan origination volume is expected to drop by about 40% to $2.4 trillion in 2022, led by a dip in refis.