ICE Mortgage Monitor: Delinquencies down but FHA stress rising

"Early-stage delinquencies (borrowers who are one or two payments behind) fell 12% during the month, while serious delinquencies (defined as 90 days or more past due) declined by 4%. Despite the monthly improvement, the delinquency rate remains 14 bps higher than a year earlier, which the Mortgage Monitor attributed in part to lingering effects from last year's hurricanes and wildfires. The March reading is still 56 bps below the average for that month during the early 2000s and 63 bps below the level recorded at the onset of the COVID-19 pandemic."

"ICE said 154,000 more borrowers are now 90 or more days past due or in active foreclosure compared with the same period a year ago. The increase was driven almost entirely by Federal Housing Administration (FHA) loans, which rose by 164,000 and now represent a record 55% of all seriously past-due mortgages nationwide. Delinquency volumes declined in conventional, whole loan and privately securitized mortgages, while those for U.S. Department of Veterans Affairs (VA) loans rose 2%."

"Overall, 1.6% of active mortgages are now seriously past due, up 26 bps, or 20%, from a year earlier. That rate remains slightly above levels in the early 2000s but are about 7% below March averages from 2018 to 2020. ICE said seasonal trends typically continue to ease serious delinquencies through May, which could help reduce near-term volumes."

"ICE reporting U.S. home price growth of 0.32% in April on a seasonally adjusted basis. That's the strongest monthly gain in nearly two years, equivalent to a 3.9% annualized rate. Annual home price growth also ticked up to 0.9%. Home price growth accelerated in April as softer interest rates raised the ceiling on borrower affordability, said Andy Walden, ICE's head of mortgage and housing market research."

Early-stage delinquencies declined 12% during the month, while serious delinquencies, defined as 90 days or more past due, fell 4%. The overall delinquency rate remains 14 bps higher than a year earlier, linked in part to lingering effects from last year’s hurricanes and wildfires. March levels are still below historical averages from the early 2000s and below the onset of the COVID-19 pandemic. Higher-severity stress persists, with 154,000 more borrowers now 90+ days past due or in active foreclosure than a year ago, driven almost entirely by FHA loans. FHA loans increased by 164,000 and now account for a record 55% of seriously past-due mortgages nationwide. Seasonal trends may ease serious delinquencies through May. Home prices rose 0.32% in April on a seasonally adjusted basis, the strongest monthly gain in nearly two years, with annual growth at 0.9%.

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