Borrowers continue to be resilient as mortgage delinquencies recede 

Mortgage delinquencies improved again in February as prepayment activity increased moderately.

The national delinquency rate eased to 3.34% in February, down from 3.38% in January, according to an Intercontinental Exchange (ICE) mortgage performance report released Thursday. February’s rate was also 11 basis points lower than it was a year ago. 

In February, serious delinquencies (loans 90 or more days past due) were down month over month, with 11,000 fewer loans in that category and a total of 459,000 loans affected. On a yearly basis, the rate of serious delinquencies was 18% below the February 2023 rate of 562,000 loans.

Meanwhile, early-stage delinquencies (30 to 60 days past due) decreased month over month and year over year. In February, roughly 1.782 million loans were at least 30 days overdue. 

On the other hand, foreclosure starts marked a 27.7% month-over-month decrease to 25,000, the second lowest rate in the past year. Meanwhile, the active foreclosure inventory fell to 211,000 homes, shedding 7,000 units since January. Likewise, the 6,000 completed foreclosure sales last month were down 9.5% compared to January.

Prepayment activity rose 3 basis points in February to a level not seen since October 2023. A brief dip in mortgage rates spurred an uptick in purchase and refinance demand.

The five states with the highest delinquency rates were Mississippi, Louisiana, Alabama, Arkansas and Indiana. At the other end of the spectrum, Montana, California, Idaho, Washington and Colorado were the states with the lowest delinquency rates. 

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