February 15, 2019 / 6:35 PM / 8 months ago

U.S. mortgage delinquencies hit 18-year low in Q4 2018 -MBA

NEW YORK, Feb 15 (Reuters) - The number of U.S. homeowners who fell behind on their mortgage payments dropped to the lowest levels in 18 years in the final quarter of 2018, the Mortgage Bankers Association said on Friday.

On the other hand, the number of homeowners who saw their loans go into foreclosure rose slightly in the prior quarter, the Washington-based industry group said.

“With the unemployment rate near a 50-year low, wage growth trending higher and household debt levels relative to disposable incomes at a 35-year low, homeowners are in great shape, and mortgage performance is quite strong,” MBA’s vice president of industry analysis Marina Walsh said in a statement.

The decline in delinquencies in late 2018 came as the housing market slowed due to higher mortgage rates and tight inventories.

The Federal Reserve said earlier this week total mortgage debt fell $16 billion in the fourth quarter from the prior quarter to $9.1 trillion. That marked the first drop in home loans since 2016.

The delinquency rate for mortgages on one-to-four-unit homes decreased to a seasonally adjusted rate of 4.06 percent of all loans outstanding at the end of the fourth quarter of last year. That was the lowest level since the first quarter of 2000, MBA said.

The delinquency rate fell 41 basis points from the third quarter of 2018 and 111 basis points from a year earlier.

The percentage of home loans for which the foreclosure process began in the fourth quarter ticked up 2 basis points to 0.25 percent.

The slight pickup in mortgages in foreclosure likely stemmed from a lifting of foreclosure moratoriums in states impacted by natural disasters, in combination with severely delinquent mortgages that have finally moved into the foreclosure process, especially those loans in states where foreclosure procedures are much slower moving, Walsh said.

Mortgage delinquencies in states hurt by storms the past two years fell from a year earlier, meanwhile.

For example, the delinquency rate in Florida dropped 458 basis points in the fourth quarter as the effects of Hurricane Irma dissipated. The delinquency rate in Texas declined 218 basis points as the impact from Hurricane Harvey faded, MBA said.

“Florida’s Hurricane Michael in October, as well as the California fires in November, have had limited impact on the overall delinquency rates in those states,” Walsh said. (Reporting by Richard Leong Editing by Tom Brown)

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