Delinquent mortgages rise year-over-year

Serious mortgage delinquencies in March were at their lowest level since before the Great Financial Crisis, although the overall rate of borrowers who didn't make their payment on time rose 9% from last year, ICE Mortgage Technology said.

Delinquencies dipped slightly to a rate of 3.2% for March, down 4.15% or 14 basis points from 3.34% in February, its First Look report said. However, in March 2023 total delinquencies were at their all-time low point of 2.92%, making it a year-over-year increase of 9.2%.

Industry observers have noted that the increased equity most homeowners have gained in recent years encouraged borrowers to keep making their payments. Those who are having difficulties have an exit strategy that lets them pay down their loan.

Similarly, a recent report from Morningstar DBRS on securitized mortgages found the total delinquency rate down 3 basis points in March at 1.55% from February but up 10 basis points from one year prior.

In a typical March, mortgage delinquency rates are down on average by 10.4% from February. However, when any month ends on a Sunday, because payments are not normally processed on that day (or the day before), the rate rises 6.9%.

This was the third time in the past two decades where March ended on a Sunday, and that 4.15% improvement was in line with those other two occurrences, ICE Mortgage Technology said.

Meanwhile, the number of properties for which the borrower is considered serious delinquent — more than 90 days late on their payments, but not yet in foreclosure — was 435,000, the lowest number since June 2006, according to ICE Mortgage Technology. This is 24,000 fewer than in February and 77,000 below March 2023.

All properties where the borrower has missed at least one payment totaled over 1.7 million, which is 71,000 fewer a month ago, but 172,000 more than March 2023.

The foreclosure pre-sale inventory consisted of 205,000 properties, a decline of 6,000 versus February and 35,000 fewer than one year ago.

Prepayment speeds increased in March, primarily because mortgage rates were lower in January and at the start of February. It was the highest level of borrowers paying off their loans early in seven months.

The monthly prepayment rate of 48 basis points was over 15% higher than February. But it was 4.14% slower than during March 2023.