Mortgage Daily Logo
mortgage news from industry experts

Prime, Subprime Delinquency Plunges

Prime, Subprime Delinquency Plunges

3rd quarter delinquency down 34 BPS, MBA reports

December 10, 2003

By staff

While the foreclosure inventory remained flat during the third quarter, more borrowers paid their mortgages on time — resulting in the lowest delinquency rate in three years — an industry report said.

According to the National Delinquency Survey released Tuesday by the Mortgage Bankers Association of America (MBA), the seasonally adjusted delinquency rate for one-to-four unit properties fell 34 basis points (BPS) from the second quarter to 4.28%. A year ago, the rate was 4.66%.

The delinquency rate is at its lowest level since the third quarter of 2000 when it was 3.98%, said MBA spokesman Matthew Royse. The group added that the 34 BPS drop is the highest percentage-point reduction since the first quarter of 1990.

“With the expectation of continued strong economic growth through the next several quarters, job growth should continue and accelerate,” said the group’s chief economist Doug Duncan, in a statement. “This, in turn, is likely to give support to the downward trend in the delinquency rate, taking foreclosures lower as well.”

“While economic growth will lower delinquency rates, most loans have now been on the books less than three years so some increase in delinquency might be expected as they age,” added Duncan.

The lower overall delinquency rate was primarily due to fewer loans delinquent in the 30-to-59-day category, the survey said. On a seasonally adjusted basis, the percentage of these loans fell 23 BPS from the second quarter to 2.77%, said Royse.

Of the three loans types, FHA loans had the highest delinquency rate at 12.13%, although the figure is down 46 BPS from the second quarter. The VA loan delinquency rate dropped 50 basis points to 7.74%, while for conventional loans it fell 21 BPS to 2.93%, according to the survey.

The delinquency rate for prime conventional loans fell 15 BPS to 2.45%, and plunged 128 BPS to 11.71% for subprime conventional loans. The MBA pointed out the subprime rate was derived from a much smaller sample of loans — 1.5 million. Fourth-quarter results should reflect a much better representation of the subprime market when 2.5 million more subprime loans are studied, said Duncan in a conference call.

The percentage of loans in the process of foreclosure, which are not included in the overall delinquency figure, was 1.12%, unchanged from the second quarter. FHA loans jumped the most — increasing 16 BPS from the second quarter to 2.80%. VA loans were reported at 1.53% and conventional loans were 0.84%, according to the survey.

The rate of foreclosure loans started during the second quarter increased 6 BPS to 0.38% for all loans. MBA added that the rate of foreclosures started for FHA loans is the highest ever registered in the survey, up 17 BPS to 0.98%.

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts