The national mortgage delinquency rate rose 14 basis points in September with serious delinquencies reaching a 16-month high, according to Intercontinental Exchange (ICE), a financial services company.
Mortgage delinquencies had been on a three-month downward trend until September, according to ICE’s monthly report. Another worrying concern is that this was the fourth consecutive year-over-year rise in mortgage delinquencies, the longest stretch since 2018, not counting the initial COVID-19 months.
ICE pointed to “small pockets of pressure” for the uptick in mortgage delinquencies. These include higher interest rates in the past couple of years as well as natural disasters such as hurricanes Helene and Milton and rising unemployment. (The U.S. unemployment levels rose from 3.7% in January to 4.3% in July before declining to 4.1% in September, according to the U.S. Department of Labor.)
Serious delinquencies, defined as homeowners who are 90-plus days late in making mortgage payment but who are not yet in foreclosure, rose 5.9% month over month in the September report.
Still, foreclosure activity remained below 34% below pre-pandemic levels. Foreclosure starts and completions were both down in September. High equity in homes was cited as a reason that more foreclosures haven’t occurred. Homeowners in distress can sell the property before it reaches that stage.
One other note in the ICE report: prepayment of mortgages, or paying off the loan early, rose 2.5% in September from the previous month and was up 43.2% year over year.
