Mortgage prepayment rate is lowest in 10 years: Black Knight

Register now

Mortgage prepayment speeds fell to their lowest level in 10 years in November as rising interest rates took a toll on origination activity, Black Knight said.

The monthly prepayment rate was 66 basis points, down 14.95% from October's 80 basis points and down 33% from 98 basis points in November 2017, according to the company's First Look report.

Mortgage rates climbed as the 30-year fixed-rate loan reached a seven-year high for both the weeks of Nov. 8 and Nov. 15, according to Freddie Mac.

But by the end of December, it fell 32 basis points from the high point, resulting in increased refinance activity, which could affect this month's prepayment speeds.

Even though refis typically drive prepays, recently the primary driver was existing-home sales, Black Knight said in a press release. However, those rose for the second consecutive month.

"The last time the prepayment rate was this low — in the heat of the financial crisis — interest rates were above 6% and purchase lending had fallen by more than 50% in a 24-month span," Black Knight said.

Mortgage delinquencies rose by 1.78% from October to 3.71%, which Black Knight termed as a seasonal increase. Compared with last November, borrowers that are 30 days or more late on their payments is down 18.53%.

There were 45,200 foreclosure starts during November, this is down 10.67% from October and 5.44% from one year ago.

The number of properties with a delinquent loan but not yet in foreclosure is 1.925 million, up 41,000 from October, but down 399,000 from November 2017. Seriously delinquent loans — those 90 days late but not yet in foreclosure — rose by 11,000 from the previous month to 510,000.

There are 268,000 properties in foreclosure, up 1,000 from October although down 69,000 from November 2017.

For reprint and licensing requests for this article, click here.
Purchase Refinance Mortgage defaults Foreclosures Delinquencies Black Knight