“Mortgage NPLs in Q1 2023 fall to second lowest level in MBA survey”

To Estimated risk per 05/11/2023 10:19:00 AM

From MBA: Mortgage NPLs drop to second-lowest level in MBA survey in Q1 2023

The level of arrears on mortgage loans for housing from one to four apartments decreased to seasonally adjusted rate of 3.56 percent of all loans outstanding as of the end of the first quarter of 2023, according to the Mortgage Bankers Association (MBA) National Arrears Survey.

The level of arrears decreased by 40 basis points compared to the fourth quarter of 2022 and by 55 basis points compared to last year. The share of loans initiated for foreclosure in the first quarter increased by 2 basis points to 0.16 percent.

Mortgage arrears fell to their lowest level in the first quarter since the MBA survey began in 1979. and was the second-lowest quarterly overall, just 11 basis points above the survey’s low in the third quarter of 2022,” said Marina Walsh, CMB, MBA vice president of industry analysis. “Mortgage delinquency and unemployment continue to closely follow each other, with the unemployment rate falling in April to a 54-year low of 3.4 percent set in January.”

Walsh added: “In line with the robust labor market, existing mortgages are performing better than expected. All states saw an improvement in the first quarter compared to last year. Delinquencies are down year-over-year across all product types – FHA, VA and conventional – have also declined.”
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MBA delinquency by periodsClick on the graph to enlarge the image.

This graph shows the percentage of overdue loans by day past due. Overall, NPLs declined in the first quarter.

From MBA:

Compared to the previous quarter, seasonally adjusted mortgage arrears decreased for all outstanding loans. In phases, 30 days past due decreased by 15 basis points to 1.77%, 60 days past due decreased by 11 basis points to 0.55% and 90 days past due decreased by 14 basis points to 1.24%.

The level of arrears includes loans with at least one payment overdue, but does not include loans in the process of being foreclosed. The share of loans in foreclosure at the end of the first quarter was 0.57 percent, unchanged from the fourth quarter of 2022 and 4 basis points higher than a year ago.

The sharp increase in 2020 in the 90-day basket was due to loans in early repayment. (included as overdue but not reported to credit bureaus).

The share of loans in foreclosure increased slightly year-on-year in the first quarter with the end of moratoriums on foreclosure, but remains historically low.