ICE First Look at Mortgage Performance: Foreclosures Up but Delinquencies Improve as the Mortgage Market Kicks Off 2024
- Decrease in national delinquency rate to 3.38% in January
- Serious delinquencies down by 19% year over year
- 34K foreclosure starts in January, marking a 43.3% increase month over month
- Slight rise in prepayment activity due to easing interest rates
- Foreclosure sales up by 23.39% in January
- None.
Insights
The reported decline in the national delinquency rate to 3.38% signifies a stabilization of mortgage repayments post the seasonal highs often observed in December. This figure is particularly noteworthy as it aligns with rates from the previous year, suggesting a consistent pattern in borrower behavior. The reduction in serious delinquencies, down by 19% year-over-year, indicates a robust recovery in the housing market and reflects positively on consumer financial health. However, the increase in foreclosure starts by 43.3% month-over-month, although partly attributed to seasonal pressures, warrants attention as it may signal a shift in lender behavior or reveal underlying distress in certain borrower segments.
From an investor's perspective, the stability in delinquency rates and the significant drop in serious delinquencies could be indicative of a resilient consumer base, which is a positive sign for mortgage-backed securities and the financial sector at large. Nevertheless, the uptick in foreclosure starts could be a precursor to increased supply in the housing market, potentially putting downward pressure on home prices. Monitoring these foreclosure trends is essential for investors as they can influence both the performance of mortgage-related investments and the broader financial market.
The granular data showing a marginal increase in prepayment activity, due to easing interest rates, suggests a slight uptick in refinancing and homebuyer demand. This behavior typically occurs when borrowers seek to capitalize on lower rates, which can lead to a more competitive lending environment and potentially stimulate the housing market.
Geographically, the variation in delinquency rates, with states like Mississippi and Louisiana having higher rates, could be indicative of regional economic disparities. Investors and financial institutions might use this data to tailor their risk management strategies and lending practices to different states. The data also highlights the importance of understanding local market conditions, as they can significantly impact the performance of real estate portfolios and the risk profile of mortgage-backed investments.
The year-over-year decrease in foreclosure pre-sale inventory rate, sitting at -9.35%, alongside a decline in properties 90 or more days past due, suggests an overall improvement in economic conditions and consumer financial stability. This is a positive signal for the health of the economy, as high levels of delinquencies and foreclosures are often associated with broader economic distress. Moreover, the current state of the mortgage market, with a significant proportion of serious delinquencies being protected from foreclosure, implies that policy measures and forbearance programs may still be providing a safety net for borrowers, thereby mitigating the immediate risk of a foreclosure wave.
However, the increase in foreclosure starts and sales could indicate that these protections are beginning to wane, potentially leading to more pronounced market corrections in the future. This dynamic is crucial for stakeholders to monitor, as it can have far-reaching implications for consumer spending, the housing market and overall economic growth.
-
In an expected rebound from December’s calendar-driven rise, the national delinquency rate dropped to
3.38% in January, the lowest level since October, and flat from the same time last year - Past-due mortgages were down across the board, as inflows and rolls to later stages of delinquency fell, while early- and late-stage delinquency cures improved
-
Serious delinquencies (loans 90+ days past due but not in active foreclosure) were down 109K (-
19% ) year over year, with the population now at 470K -
Representing
7.2% of serious delinquencies, January’s 34K foreclosure starts – the most since April 2022 – marked a +43.3% month over month jump, driven in part by seasonal pressures -
The number of loans in active foreclosure rose 7K to 219K, but remained
23% below (-64K) pre-pandemic levels -
6.6K foreclosure sales were completed nationally in January, a
23% increase from the previous month but in line with the monthly average for the preceding year -
While January’s jump in foreclosures is worth watching, serious delinquencies remain low, with
70% of such loans still protected from foreclosure, reducing near-term risk - Prepayment activity rose marginally as recently easing interest rates in December and January provided a modest increase in refinance incentive and homebuyer demand
Data as of Jan. 31, 2024
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: 6,600
Month-over-month change:
Year-over-year change: -
Number of properties that are 30 or more days past due, but not in foreclosure: 1,803,000
Month-over-month change: -106,000
Year-over-year change: 28,000
Number of properties that are 90 or more days past due, but not in foreclosure: 470,000
Month-over-month change: -5,000
Year-over-year change: -109,000
Number of properties in foreclosure pre-sale inventory: 219,000
Month-over-month change: 7,000
Year-over-year change: -19,000
Number of properties that are 30 or more days past due or in foreclosure: 2,022,000
Month-over-month change: -98,000
Year-over-year change: 9,000
Top 5 States by Non-Current* Percentage |
||
|
6.07 |
% |
|
5.43 |
% |
|
4.48 |
% |
|
4.45 |
% |
|
4.24 |
% |
|
||
Bottom 5 States by Non-Current* Percentage |
||
|
2.17 |
% |
|
2.10 |
% |
|
2.09 |
% |
|
2.09 |
% |
|
1.97 |
% |
Top 5 States by 90+ Days Delinquent Percentage |
||
|
2.17 |
% |
|
1.97 |
% |
|
1.53 |
% |
|
1.32 |
% |
|
1.23 |
% |
Top 5 States by 12-Month Change in Non-Current* Percentage |
||
|
-8.94 |
% |
|
-7.97 |
% |
|
-7.90 |
% |
|
-7.69 |
% |
|
-7.63 |
% |
|
||
Bottom 5 States by 12-Month Change in Non-Current* Percentage |
||
|
8.66 |
% |
|
6.06 |
% |
|
5.64 |
% |
|
4.98 |
% |
|
4.95 |
% |
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
Notes:
- Totals are extrapolated based on ICE’s McDash loan-level database of mortgage assets.
- 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.icemortgagetechnology.com/resources/data-reports by March 4, 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
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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, 2023, as filed with the SEC on February 8, 2024.
Category: Mortgage Technology
ICE-CORP
Source: Intercontinental Exchange
View source version on businesswire.com: https://www.businesswire.com/news/home/20240222225234/en/
ICE Media Contact
Mitch Cohen
mitch.cohen@bkfs.com
+1 704-890-8158
ICE Investor Contact:
Katia Gonzalez
katia.gonzalez@ice.com
+1 (678) 981-3882
Source: Intercontinental Exchange
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