Rising interest rates had no effect on the delinquency rate spiking 9.9% from May to June, Lender Processing Services said in its monthly Mortgage Monitor report.
For example, adjustable-rate mortgages—which would be the product types impacted most by interest rate changes—actually saw delinquencies increase at a relative lower rate than fixed mortgages in June. ARMs were up 18% on a month-over-month basis, while fixed-rate mortgages rose 19% during this time.
The Jacksonville, Fla.-based analytic provider said the delinquency uptick was based on approximately 700,000 new 30-day delinquency loans during June. LPS said this phenomenon was felt in all 50 states, from a roughly 14% rise on a monthly basis in Nevada to a nearly 32% upswing in Colorado.
Overall, the
Despite the recent June increase in delinquencies after five consecutive months of decline, 2013 is still performing much better than most years. Since 1995, delinquency rates have risen from the first quarter to the second quarter in all but two years, with an average 7.3% increase. However, the quarter-over-quarter increase in 2013 was only 1.34%.
“June’s increase in delinquencies is representative of a documented seasonal phenomenon,” said Herb Blecher, senior vice president of applied analytics at Lender Processing Services.
“Over the last 18 years, similar changes occurred in June for all but four of those years. Of course, focusing solely on month-to-month shifts in mortgage performance can be like tracking the stock market on a daily basis. You may see periodic spikes and dips, but without a long-term perspective, you lack a clear picture of how the market is actually performing.”
LPS said one area in which higher mortgage interest rates is affecting the mortgage industry is with refinances. The total pool of refinance opportunities have fallen considerably even though equity situations have improved nationwide, as approximately 12% of active loans, or 5.9 million, can be refinanced as of June, LPS said. This is down from 8.9 million in March when rates were at historic lows.
Even with higher rates, prepayment activity, while down in June, is still significantly higher than it had been back in 2011 when rates were last at the point where they currently are.
