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 -23 bps last week. This may have been 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) Jobs, 2) Central Banks and 3) Manufacturing.

1) Jobs: We get a ton of job and wage related data this week culminating in Big Jobs Friday. The stronger this data is, the worse it will be for rates.

2) Central Banks: We will get key interest rate decisions from Australia and England with the focus on the Bank of England which is expected to increase rates by 25BPS but their commentary will carry a lot of weight.

3) Manufacturing: The big soft-spot in our economy over the last 10 to 12 months has been the manufacturing sector which just continues to contract each month. This week we get a lot of manufacturing news and the bond market will be very focused on any bright spots.

This Week's Potential Volatility: High

This morning markets are mostly treading water. Volatility has started moderate but we have plenty of big news items on the horizon.

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.

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