
In an eye-opening report from ICE, mortgage delinquencies surged to their highest point in three years as of November, with natural disasters playing a pivotal role in this trend.
While experts urge vigilance regarding this increasing rate, they also highlight that the proportion of borrowers falling behind remains relatively low compared to historical averages.
The most pressing issues appear to be concentrated among government-backed loans, particularly those issued by the Federal Housing Administration (FHA).
Current Delinquency Rates
The data reveals that the share of loans overdue by at least 30 days, but not yet facing foreclosure, rose to 3.74% in November.
This uptick marks a steady increase over the past six months.
Currently, approximately 2.027 million properties are delinquent, representing a rise of 159,000 since October, and an increase of 224,000 compared to November 2022.
Seasonal factors, including the timing of Thanksgiving and various hurricanes, have been cited as contributing elements to this surge.
Impact of Natural Disasters
The vice president of research and analysis at ICE noted that for six months straight, delinquencies have been surpassing figures from the same period last year, indicating a noticeable trend upwards.
Even though current numbers are significantly below long-term averages, the spike observed in November calls for careful observation as the sector gears up for 2025.
Natural disasters added further strain; for instance, hurricanes Helene and Milton accounted for an additional 14,000 delinquent loans, adding up to 56,000 in total.
Hurricane Beryl exacerbated the situation by contributing another 5,000 cases to that tally.
Foreclosure and Prepayment Rates
Serious delinquencies, which are loans outstanding for 90 days or longer, also saw an uptick in November, climbing to 512,000—a rise of 32,000 from the previous month and an increase of 53,000 from the same month last year.
This figure represents the highest count since February 2023.
On a more positive note, foreclosure activity remains low.
The pre-sale foreclosure inventory rate sits at just 0.34%.
In November alone, 21,000 new foreclosure cases were initiated.
This is a notable decrease of 29% from the previous month as well as from last year’s figures.
Meanwhile, the prepayment rate fell to 0.63% in November, a drop of 25% when compared to October.
However, looking back over the last year, this figure reveals a substantial increase of 71%.
The rise in mortgage rates appears to be influencing these dynamics.
As the data unfolds, it is crucial for stakeholders in the mortgage industry to remain alert to these developing trends while recognizing the context behind the figures.
Source: Housingwire