Mortgage Delinquencies Fall to New Lows, But Foreclosures Climb
WASHINGTON – U.S. mortgage delinquency rates continued their downward trend in October, reaching 3.34%,according to a new report from ICE Mortgage Technology. This represents a decrease of approximately 2% from September and 3% year-over-year. However, despite improved loan performance, foreclosure activity is on the rise.
As of october, approximately 1.84 million mortgages were 60 or more days delinquent but not yet in foreclosure – a decrease of 36,000 from the previous month and 28,000 from October 2024. seriously delinquent mortgages numbered around 476,000,down 1,000 month-over-month and 3,000 year-over-year.
While foreclosure starts dipped slightly in October to around 38,000 – a 10% decrease from September – they remain nearly 30% higher than in October 2024. This contributes to a growing foreclosure inventory,which is significantly up from last year’s levels.
The number of loans in active foreclosure reached it’s highest point sence early 2023, fueled by an increase in foreclosures backed by the Federal Housing Governance (FHA) and the resumption of activity within the Department of Veterans Affairs (VA) loan program following last year’s moratorium.
The total foreclosure pre-sale inventory rate rose to 0.41%, an increase of 1.65% compared to September and more than 17% compared to October 2024. This translates to approximately 226,000 properties in the foreclosure pre-sale inventory, up 4,000 from the previous month and 37,000 from a year ago.
Meanwhile,the monthly pre-payment rate increased to 1.01%, a jump of nearly 37% from September and nearly 20% from October 2024.
“Softening mortgage rates expanded the pool of refinance candidates in October, pushing prepayments to their highest level in three and a half years,” explained Andy Walden, head of mortgage and housing market research at ICE. “This trend was largely driven by people who purchased homes at elevated rates in recent years seizing the opportunity to lower their monthly payments.”
Walden added, “Overall mortgage health remains solid, with continued betterment in delinquency rates across all stages. While foreclosure activity has ticked up,levels remain historically low. This uptick is driven by a rise in FHA foreclosures along with the resumption in VA foreclosures following last year’s moratorium.”
