Mortgage delinquency rate hits fresh record low

May saw a slight seasonal increase in early-stage delinquencies (borrowers who have missed a single mortgage payment), up 0.2% month over month.

Meanwhile, serious delinquencies (loans 90 days or more past due but not yet in foreclosure) significantly improved, falling 7% from April. Serious delinquency rates stay 45% above pre-COVID levels.

“Despite these elevated levels of serious delinquencies, foreclosure starts dropped 12% from April and, at just under 19k for the month, continue to hold well below pre-pandemic levels,” Black Knight noted. “Likewise, while the number of loans in active foreclosure rose marginally (+1k), this population remains well below pre-pandemic norms.”

Lastly, prepayment activity declined 11.1% from April and 59.1% from May 2021 due to rising mortgage rates. As of June 23, the 30-year fixed mortgage rate had climbed to 5.81% and was more than two percentage points higher than it was at the beginning of the year, according to Freddie Mac.