March/April 2021 Edition

Marketpulse: National Delinquency Rate Falls

Black Knight reports that March is almost always the best month of the year in terms of mortgage performance. Over the past 20 years, delinquencies have declined an average of 10% in March as homeowners have used tax refunds and bonuses to get current on lapsed mortgage payments. This year, there were also hundreds of billions in stimulus payments playing a role as well. Plus, the overall economy has been improving as well.

In addition, the months following those that end on Sundays tend to see big improvements. This year, both January and February ended on Sundays, setting the stage for a larger than usual comeback for those calendar-impacted delinquencies.

The result? The national mortgage delinquency rate dropped nearly a full percentage point in March to 5.02% from 6.00% in February – a 16.4% decline. Think about that: there are a half a million fewer past-due loans than there were just a month ago!

Still, despite this strong performance, some 1.9M mortgage-holders – including those in active forbearance – remain at least 90 days past due on payments. That’s nearly 1.5M more than at this point last year and 5X pre-pandemic levels.

And despite a M/M uptick in starts, the number of loans in active foreclosures fell to yet another record low in March, as widespread moratoriums and forbearance utilization continue to limit both foreclosure inflow and outflow.

Meanwhile, prepayments rose by 17% in March to the highest level in more than 17 years. The jump was driven by a seasonal rise in home sales alongside a spike in refinance activity locked in before rates began to rise in mid-February.