According to new data from Intercontinental Exchange (ICE), mortgage delinquencies saw a rare year-over-year increase in September — a potential signal that late-payment rates may have found their floor.
ICE reported that September’s national delinquency rate was 3.29%, a gain of 12 basis points from August and up 13 bps from September 2022. The annualized jump was only the second (and the largest) of the past 2 1/2 years, according to ICE.
On a historical basis, loan delinquencies still remain healthy, with September’s rate about 75 bps lower than the level in September 2019, before the COVID-19 pandemic. But beyond the delinquency uptick, other September numbers suggest that the impressive streak of loan performance during the COVID-19 era may be coming to an end.
For one thing, early- and middle-stage delinquencies are growing. Loans at least 30 days past due were up 5.1% from August, an equivalent of roughly 48,800 loans and the fourth straight monthly gain of loans at least one month overdue. Sixty-day delinquencies were up 3% (approximately 8,700 loans), extending the streak of increases for this category to six months.
Serious delinquencies, defined as loans at least 90 days past due, grew to 455,000, although that’s still 6.7% below the pre-pandemic level. The monthly increase was a small one, numbering about 7,000 mortgages. But notably, it’s the first serious-delinquency increase of this year and only the second in the past three years.
Meanwhile, despite the growth in delinquencies, foreclosure activity continues to abate. The number of loans in active foreclosure dropped to 214,000 in September. That’s the lowest number since March 2022 and about 25% below the pre-pandemic watermark. Foreclosure initiations were down by 20.4% in September, ending the month at 25,400. Completed foreclosure sales also fell, sliding 8% from August.