Mortgage delinquencies rose monthly and annually in May, but it's not a cause for concern, according to a new industry report.
The national delinquency rate rose 15 basis points to 3.5% last month due to a calendar anomaly, Intercontinental Exchange's latest first look report found. That marks a 4.5% month-over-month increase, which is in line with historical Sunday month-end patterns, and 9.4% year-over-year change.
Mississippi and Louisiana led all states in delinquency rate, each more than 8.3%, while Idaho and Washington posted rates near 2%.
"While the headline increase in delinquencies may draw attention, the underlying performance picture is stable as delinquencies remain below January 2020 levels," said Andy Walden, head of mortgage and housing market research at ICE, in a press release Friday.
The number of properties 30 or more days past due, but not in foreclosure, increased by 84,000 month over month and 188,000 year over year to 1.9 million in May. The number of properties seriously delinquent, 90 or more days past due, did not change from April and remained at a five-month low, but were up 111,000 from last year, the largest annual increase since 2020.
Loans cured from serious delinquency decreased 6% month over month in May, consistent with seasonal trends, after two consecutive
"The rise in early-stage delinquencies and the month-over-month decline in cures were largely driven by the Sunday month-end, which causes many mortgage payments to be processed the following business day," Walden said. "The more important trend to watch remains the continued growth in serious delinquencies and active foreclosures, particularly among FHA loans."
Foreclosure starts fell 9% from April but were still up 19% on an annual basis, while active foreclosure inventory hit 280,000 loans, a 34% jump from last year and the highest level in six years, although the foreclosure rate remained below prepandemic levels, according to the report.
The number of loans that were seriously delinquent or in active foreclosure increased by 185,000 from a year ago, again the largest annual increase since the unemployment spike in 2020.
Prepayment speed also dropped 14 basis points from April's 0.93% to 0.79%, a four-month low, as mortgage rates spiked. The 30-year fixed-rate mortgage rose from 6.37% at the beginning of the month to
"Overall mortgage performance remains healthy, yet the level of serious delinquencies and active foreclosures highlights the importance of reaching borrowers early," said Bob Hart, president of mortgage technology at ICE, in the release.
