CHM Blog

Mortgage Delinquencies drop to an all-time low

One important gauge for the Housing Market is how well people are paying their mortgages.

And in that respect, the Housing Market is looking very strong as delinquency levels for Mortgages are much lower than when interest rates were half of what they are now.

US mortgage delinquency rates hit an all-time low in May thanks to a solid labor market that continues to help borrowers pay their mortgages on time. CoreLogic has released its latest loan performance insights report, showing a 0.1% month-over-month drop in delinquencies in May. This brings the share of all delinquent mortgages down to 2.6%. Of this overall figure, 1.3% were in early-stage delinquency (30 to 59 days past due), up from 1.1% a year ago. Adverse delinquencies (60 to 89 days past due) were up three basis points annually to 0.4%, while serious delinquency rate (90 days or more past due, including loans in foreclosure) fell from its pandemic high of 4.3% to 1% in May.

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market worsened by -10 bps last week. This was not enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Treasury Sales and 3) Overseas News.

1) Inflation: We get both CPI and PPI this week with the focus on CPI which is expected increase 0.2% on a MOM basis and 3.3% on a YOY basis, compared to the June's reading of 3.0% YOY.

2) Treasury Sales: One of last week's main stories was the announcement from the Treasury department of a record amount of supply of our debt that will hit the market over the next three months. And now it begins. We have 3 year notes and 10 year notes this week but the biggest focus for MBS traders will be Thursday's auction of 30 year bonds.

3) Overseas news: Other than CPI and PPI, we have a fairly light week on our domestic calendar. Bond traders will take their cues from overseas data.

China: CPI, PPI

Japan: PPI

Germany: CPI, 10Y Bund Auction

Great Britain: GDP

This Week's Potential Volatility: High

This morning markets are mostly treading water. Volatility will remain high on the domestic and foreign inflation data.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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