Serious mortgage delinquencies hit a 17-year low

Borrowers continued to improve on their mortgage payments this summer, setting a 17-year low serious delinquency mark, according to Black Knight.

The 468,000 loans 90 or more days past due in July fell 26%, or by 161,000 mortgages year-over-year, making it the lowest level since June 2006, the firm said Wednesday. While prospective homebuyers remain sidelined by soaring mortgage rates, homeowners' delinquency rates continue to fade to decades-low figures. 

Black Knight's First Look of July data gathers information from the firm's loan-level database of mortgage assets. 

The serious delinquency count fell by 3,000 from June, while short-term delinquencies, defined by the firm as loans between 30-to-60 days past due, rose by 35,000 last month. Within that metric, 60-day delinquencies also rose 17,000 month-over-month, according to Black Knight.

Considering all home loans at least 30 days or more past due but not in foreclosure, the national delinquency rate inched up to 3.21% last month, according to Black Knight. That category covers 1,700,000 homes nationwide. Despite rising by 9 basis points from June, the share is within just 12 basis points of a record-low set in March. 

Homeowners also shied away from prepayments with mortgage rates approaching 7%, posting a 0.50% rate in July, the firm found. The pace was down 12% from June and fell 28% from the same time last year.

Foreclosures also remain muted with 220,000 such actions in July, Black Knight said. The tally is down 22% from February 2020 just prior to the pandemic, but up 15% from the same time last year. The 6,100 foreclosure sales in July was also down 18% year-over-year, and 11% fewer from the month prior.

The South remains a trouble spot for mortgage payers, with Mississippi, Louisiana and Alabama topping Black Knight's list of the top 5 states by delinquency percentage. The Pacific Northwest in contrast leads the firm's rankings for the lowest rate of delinquencies, topped by Oregon, Idaho and Montana. 

Wednesday's report follows other recent mortgage analyses describing an improving borrower makeup, with the Mortgage Bankers Association earlier this week reporting the number of loans in forbearance falling to under 200,000. As pandemic relief options dwindle, more borrowers are citing temporary hardships and natural disasters as reason for aid, the MBA said.