Both home mortgage loan delinquency rates and mortgage foreclosures
showed improvement during the first quarter of 2005 according to the Mortgage Bankers Association.
MBA's National Delinquency Survey released on Tuesday showed that the seasonally adjusted delinquency rate for mortgage loans on one-to-four family homes was 4.31 percent, down 15 basis points from the same period in 2004 and 7 basis points from the fourth quarter of last year. 1.08 percent of loans were in foreclosure at the end of the first quarter which was a drop of 7 basis points from the previous quarter and 0.42 percent of loans entered the foreclosure process, 4 basis points less than Q4.
The MBA survey covers approximately 39.4 million loans (29.4 prime loans, 5.1 million sub prime, and 5 million government insured (VA/FHA) mortgages.
Prime ARM loans showed a seasonally adjusted delinquency rate of 2.06 percent and prime fixed products were at 2.02. Each of these was down slightly from last year.
Sub prime ARMs increased 42 basis points to 10.25 percent while fixed rate sub prime loans decreased 62 basis points (from 9.72 percent to 9.10 percent.) The striking feature of these last statistics is not whether they were up or down over the previous quarter or year, but their sheer numbers in comparison to their prime loan equivalents. Sub prime loans are generally described as those given to borrowers who, in general, cannot qualify for conventional loans because of credit, debt levels, or other risk factors. VA loans also had a relatively high rate of 7.16 percent (down 23 basis points) and FHA had the highest rate of all, 11.73, up 3 basis points from Q1 of 2004.
The prime/sub prime differential holds for foreclosures as well. Prime loans were foreclosed at a rate of 0.46 percent (down 7 basis points from Q1 2004) while sub prime loans were foreclosed at a rate of 3.40 percent. The last number, however, was down significantly ' 137 basis points ' from a year earlier. VA foreclosure rates went from 1.53 percent to 1.38 percent and FHA loans were at 2.56 percent, down 22 basis points. The foreclosure rates dropped for all loan types since the Fourth Quarter of 2004.
Doug Duncan, MBA's chief economist credited continued growth in the U.S. economy along with the low interest rate environment with allowing consumers to improve their household finances. Duncan pointed out that 96 percent of homeowners made their monthly payments on time during the last quarter.