CHM Blog

Mortgage Delinquencies Hit New Low:

The Mortgage Bankers Association’s latest survey revealed that the mortgage delinquency rate decreased to a seasonally adjusted rate of 3.56% in the first quarter of 2023.

The delinquency rate for mortgage loans on one-to-four-unit residential properties fell 40 basis points quarter over quarter and down 55 basis points year over year. The share of loans on which foreclosure actions were started was up two basis points to 0.16% in Q1.

By loan type, the total delinquency rate for conventional loans fell 34 basis points to 2.44% over the previous quarter. The FHA delinquency rate plunged 134 basis points to 9.27%, and the VA delinquency rate dropped by 18 basis points to 3.98% quarter over quarter.

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 -12 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) The Fed, 2) Domestic News and 3) Debt Ceiling

1) The Fed: We are overloaded with speeches from Federal Reserve Governors and Presidents this week with several members having multiple speeches.

05/15 Bostic, Kashkari, Barkin

05/16 Mester, Bostic, Williams, Logan

05/17 Jefferson, Logan

05/18 Williams, Powell

2) Domestic News: We get a ton of housing market related news this week but it will be Retail Sales that will get the most weight by bond traders.

3) Debt Ceiling: As we move closer and closer to June, speculation and concern over the looming debt ceiling will continue to be a major focal point for all the markets.

Treasury Sales: We have a 20 year bond auction on Wednesday.

This Week's Potential Volatility: Neutral

This morning markets are mostly treading water. Volatility has started at moderate levels with potential spikes on the many Fed speeches this week.

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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