Mortgage Delinquencies Decrease in the First Quarter of 2021

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Adam DeSanctis
adesanctis@mba.org
(202) 557-2727

WASHINGTON, D.C. (May 7, 2021) - The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 6.38 percent of all loans outstanding at the end of the first quarter of 2021, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey.

For the purposes of the survey, MBA asks servicers to report loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage. The delinquency rate was down 35 basis points from the fourth quarter of 2020, and up 202 basis points from one year ago.  

"Mortgage delinquency rates continued to decrease in the first quarter of 2021, as a rebounding job market and stimulus checks helped borrowers stay current on their mortgage payments," said Marina Walsh, MBA's Vice President of Industry Analysis. "Mortgage delinquencies track closely to the U.S. unemployment rate, and with unemployment dropping from last year's spike, many households appear to be doing better." 

Walsh noted that in the history of MBA's National Delinquency Survey, there has never been such a substantial decline in the delinquency rate over such a short period of time. The mortgage delinquency rate peaked at 8.22 percent in the second quarter of 2020 and within three quarters has dropped by 184 basis points to 6.38 percent. In addition, this quarter's earliest stage delinquencies - the 30-day and 60-day delinquencies combined - dropped to the lowest levels since the inception of the survey in 1979.   

"Notwithstanding the welcome improvement in mortgage delinquencies and the positive job outlook, the delinquency rate this past quarter still remains 105 basis points higher than its historical quarterly average of 5.33 percent," added Walsh. "We continue to see seriously delinquent loans - those loans that are over 90 days past due or in the process of foreclosure - at elevated levels, particularly for FHA and VA borrowers. With extended forbearance and foreclosure moratoria still in effect, many of these borrowers are reaching later stages of delinquency. Upon exiting long-term forbearance, some borrowers - regardless of their improving employment prospects - may need more complex workout options, such as loan modifications, to remain in their homes."

Key Findings of MBA's First Quarter of 2021 National Delinquency Survey:

  • Compared to last quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding. By stage, the 30-day delinquency rate decreased 32 basis points to 1.46 percent, the lowest rate since the survey began in 1979. The 60-day delinquency rate decreased 10 basis points to 0.67 percent, the lowest rate since the second quarter of 2000. The 90-day delinquency bucket increased 7 basis points to 4.25 percent.
  • By loan type, the total delinquency rate for conventional loans decreased 52 basis points to 4.57 percent over the previous quarter. The FHA delinquency rate increased 2 basis points to 14.67 percent, and the VA delinquency rate increased by 33 basis points to 7.62 percent.
  • On a year-over-year basis, total mortgage delinquencies increased for all loans outstanding. The delinquency rate increased by 141 basis points for conventional loans, increased 498 basis points for FHA loans, and increased 297 basis points for VA loans.
  • The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans on which foreclosure actions were started in the first quarter rose by 1 basis point to 0.04 percent. The percentage of loans in the foreclosure process at the end of the first quarter was 0.54 percent, down 2 basis points from the fourth quarter of 2020 and 19 basis points from one year ago. This is the lowest foreclosure inventory rate since the first quarter of 1982.
  • The seriously delinquent rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 4.70 percent. It decreased by 33 basis points from last quarter and increased by 303 basis points from last year. From the previous quarter, the seriously delinquent rate decreased 34 basis points for conventional loans, decreased 19 basis points for FHA loans, and decreased 37 basis points for VA loans. Compared to a year ago, the seriously delinquent rate increased by 205 basis points for conventional loans, increased 771 basis points for FHA loans, and increased 379 basis points for VA loans.
  • Note: An estimated 2.23 million homeowners were on forbearance plans as of April 25, 2021. As previously stated, for the purposes of this survey, MBA asks servicers to report the loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage.