ICE First Look at Mortgage Performance: December Delinquencies Rise on Calendar Effects; Foreclosures Approach Two-year Lows
- 3.57% national delinquency rate for December 2023
- Serious delinquencies rose to 475,000, still 19% below December 2022
- Foreclosure starts marked an 18-month low in new activity
- Prepayment activity rose by 4.9%
- Detailed Mortgage Monitor report available online by February 5, 2024
- Serious delinquencies rose
- Foreclosure sales down by -17.22% from November
- Foreclosure starts at 24,000, marking an 18-month low
Insights
The uptick in the national delinquency rate to 3.57%, a rise of 19 basis points from November, is a modest yet noticeable indicator of potential stress in the housing market. While the increase is attributed to a technicality—December ending on a Sunday—such fluctuations can reveal underlying vulnerabilities in borrowers' ability to meet their mortgage obligations. This is particularly relevant in the context of economic cycles where consumer financial stability is a leading indicator of broader economic health.
Furthermore, the year-over-year change shows a 2.65% increase in delinquency rates, suggesting a trend that warrants monitoring. The decline in foreclosure starts and sales reflects a cooling off in the foreclosure market, which can be a double-edged sword. On one hand, it may indicate a healthier market with fewer distressed properties. On the other, it might signal that there are barriers to foreclosure, potentially creating a backlog of distressed properties that could affect market dynamics in the future.
The data indicating a decrease in foreclosure pre-sale inventory rates by 10.22% year-over-year and an 18-month low in new foreclosure starts suggests a tightening of housing supply in the foreclosure market. This could impact the availability of lower-priced homes for investors and first-time homebuyers. The reduction in inventory, coupled with a decrease in foreclosure sales, could apply upward pressure on home prices in certain segments of the market.
Prepayment activity, with a single month mortality rate of 0.39%, is another critical metric for investors and market analysts. An increase in prepayments often signals that homeowners are refinancing to take advantage of lower mortgage rates, which can indicate consumer confidence and financial health. However, the report notes that prepayments are constrained by seasonal and affordability pressures, which could limit refinancing activity and thus impact mortgage-related securities.
From an investment standpoint, the reported mortgage performance statistics can influence the valuation of mortgage-backed securities (MBS). An increase in delinquency rates, even moderate, could potentially lead to higher perceived risk and thus higher yields demanded by investors. Conversely, the low foreclosure starts and sales figures suggest a stable housing market, which could be positive for MBS prices.
Investors should also consider the regional disparities highlighted in the report, with states like Mississippi and Louisiana showing significantly higher non-current percentages. Such geographical differences can affect the performance of region-specific mortgage assets and should be factored into risk assessments and portfolio diversification strategies.
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In large part due to December ending on a Sunday, delaying the processing of payments made on the last day of the month, the national delinquency rate hit
3.57% , up 19 bps from November -
Though the rise (+
5.6% ) was larger than an average December (+1.4% ), it was milder than past Sunday-month-end Decembers, which have seen delinquencies jump +9.9% on average - Delinquencies were up moderately across the board, as inflows and rolls to later stages of delinquency rose, while cures from both early- and late-stage delinquency improved
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Serious delinquencies (90+ days past due) rose to 475K, but were still
19% (-108K) below where they were they ended December 2022 -
December’s 24K foreclosure starts marked an 18-month low in new activity, with total active foreclosures the lowest since March 2022 (212K), still
25% below (-71K) pre-pandemic levels -
Likewise, the 5.4K foreclosure sales (completions) in December were down -
17.2% from November and the fewest since February 2022 – shortly after the end of COVID-era moratoria -
Prepayment activity rose +
4.9% to a single month mortality rate of0.39% on improving interest rates, but prepays remain constrained by both seasonal and affordability pressures
Data as of Dec. 31, 2023
Total
Month-over-month change:
Year-over-year change:
Total
Month-over-month change: -
Year-over-year change: -
Total
Month-over-month change -
Year-over-year change: -
Monthly prepayment rate (SMM):
Month-over-month change:
Year-over-year change: -
Foreclosure sales: 5,400
Month-over-month change: -
Year-over-year change: -
Number of properties that are 30 or more days past due, but not in foreclosure: 1,908,000
Month-over-month change: 105,000
Year-over-year change: 81,000
Number of properties that are 90 or more days past due, but not in foreclosure: 475,000
Month-over-month change: 15,000
Year-over-year change: -108,000
Number of properties in foreclosure pre-sale inventory: 212,000
Month-over-month change: -5,000
Year-over-year change: -20,000
Number of properties that are 30 or more days past due or in foreclosure: 2,120,000
Month-over-month change: 100,000
Year-over-year change: 61,000
Top 5 States by Non-Current* Percentage |
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Bottom 5 States by Non-Current* Percentage |
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Washington: |
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Top 5 States by 90+ Days Delinquent Percentage |
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Mississippi: |
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Alabama: |
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Georgia: |
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Top 5 States by 12-Month Change in Non-Current* Percentage |
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North Dakota: |
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Rhode Island: |
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Wyoming: |
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Bottom 5 States by 12-Month Change in Non-Current* Percentage |
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*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
Notes:
1) Totals are extrapolated based on ICE’s McDash loan-level database of mortgage assets.
2) All whole numbers are rounded to the nearest thousand, except foreclosure starts and sales, which are rounded to the nearest hundred.
The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which includes an analysis of data supplemented by detailed charts and graphs that reflect trend and point-in-time observations. The Mortgage Monitor report will be available online at https://www.blackknightinc.com/data-reports/ by February 5, 2024.
For more information about gaining access to ICE’s loan-level database, please send an email to Mortgage.Monitor@bkfs.com.
About Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges – including the New York Stock Exchange – and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 – Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on February 2, 2023.
Category: Mortgage Technology
ICE-CORP
Source: Intercontinental Exchange
View source version on businesswire.com: https://www.businesswire.com/news/home/20240124523714/en/
ICE Media Contact
Mitch Cohen
mitch.cohen@bkfs.com
+1 704-890-8158
ICE Investor Contact:
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katia.gonzalez@ice.com
+1 (678) 981-3882
Source: Intercontinental Exchange
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