Mortgage delinquencies rose in June: Black Knight

Delinquencies reversed course in June after three consecutive months of drops to record lows, according to Black Knight, but experts there warned not to make too much of the recent change.

The overall delinquency rate, excluding foreclosures, rose 9 basis points from May to 2.84%, according to Black Knight’s First Look report. Both short- and long-term delinquencies increased during the month, with the increase in the latter being the first seen in almost two years. During June, 1.51 million mortgages had payments that were one-month late, 599,000 were 90 days or more past due. Short-term delinquencies were up by around 50,000 and payments that were late for a longer period of time registered an increase of 4,000.

While the increases could be interpreted as a sign that remaining pandemic relief may be doing less to offset consumer stress from inflation and higher rates, Andy Walden, vice president of research and strategy at Black Knight, warned that it could prove to be an aberration.

“While we did see a pullback in loans curing from serious delinquency in June, we expect the overall trend of improvement of the last 21 months is likely to continue in the coming months,” he said in an email.

Foreclosure activity, which has been rebounding from previous pandemic-related constraints, also increased in June, with 23,800 starts during the month, representing an increase of 27% on a consecutive month basis and 441% from a year earlier.

The general trend toward higher rates reduced both refinance and purchase mortgage activity in the past month, causing prepayment rates to drop by 7% on a consecutive-month basis and 64% from a year ago. The prepayment rate in June was 0.81%, according to Black Knight.

Some stark differences persist by state when it comes to loan performance. While just 1.66% of mortgages in Idaho were delinquent or in foreclosure last month, in Mississippi the noncurrent percentage was 6.41%.

In most states the non-current percentage has been dropping, but the range of improvement, however, has varied widely. In Hawaii the noncurrent percentage dropped by almost 22% over the past six months, but in one state, North Dakota, it rose 1.91%.

Black Knight uses extrapolation in calculating its statistics. It also rounds all data points except foreclosure starts to the nearest thousand. The company rounds foreclosure starts to the nearest hundred.