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Mortgage Delinquency Report (MBA)

(May 28, 2009 Release)


• Mortgage delinquency rates surged 124 basis points to a record high 9.12 percent in the first quarter from the fourth quarter of last year.
• 1.37 percent of mortgages entered foreclosure in the first quarter, up 29 basis points from the fourth quarter of last year.
• The total delinquency rate in the first quarter of 2009 was 277 basis points higher than the 6.35 percent delinquency rate in the first quarter of 2008.
• The delinquency rate rose substantially for both fixed rate and adjustable rate prime mortgage loans as well as for subprime loans.

MBA Mortgage Delinquency Rates
Q1 09 Q4 08 Q3 08 Q2 08
All Loans 9.12 7.88 6.99 6.41
Prime Fixed Rate 4.68 3.92 3.35 3.07
Prime ARM 12.04 9.69 8.20 7.49
Subprime Fixed Rate 22.73 19.43 18.00 16.02
Subprime ARM 27.58 24.22 21.31 21.03
Percent in Foreclosure
All Loans 1.37 1.08 1.07 1.08
Prime Fixed Rate 0.61 0.41 0.34 0.34
Prime ARM 2.51 1.84 1.77 1.82
Subprime Fixed Rate 2.74 2.32 2.23 2.07
Subprime ARM 6.91 5.73 6.47 6.63

Source: Mortgage Bankers Association


Both delinquency rates and foreclosure rates rose significantly in the first quarter. The delinquency rate for all loans is now at a record high 9.12 percent. Delinquency rates for prime fixed rate loans rose by 76 basis points, while delinquency rates for prime ARM loans increased by 235 basis points. Similarly, delinquency rates for subprime fixed rate loans rose by 330 basis points, while delinquency rates for subprime ARM loans increased by 336 basis points. The surge in delinquency rates for all types of loans is disappointing news for the housing markets. The extraordinarily high percentages of loans that are delinquent reflects weak economic conditions. High delinquency rates also reflect the loose lending standards practiced during the boom years. In addition, it is likely that the share bad loans made during the boom years as a percentage of total loans today is increasing, exaggerating the delinquency numbers. This is because the pace of mortgages originated during the past two years has been substantially slower than the previous two years.

The substantial rise in delinquency rates portends unfavorably for future foreclosures (now that the moratoriums are lifted) and for conditions in the housing sector in general. A deteriorating job market suggests that delinquency rates could rise into the second quarter of this year. As long as our economy remains in recession, the delinquency and foreclosure situations remain fragile, to say the least.

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