What Effects Do Low Rates Have on Mortgage Holders?

DSNews.com, August 1st, 2016

Foreclosure Three BHThe recent Black Knight Financial Services Mortgage Monitor for June 2016 analyzes the effect that new multi-year lows in rates are having on the population of 30-year mortgage holders who could both likely qualify for and benefit from refinancing.

According to the report, a usual seasonal monthly increase was shown in the delinquency rate, consistent to that observed in five of the last six Junes. They state that even with this rise, delinquencies are down 10 percent from last year.

Likewise, early stage delinquencies, 30 and 60-day, increased by approximately 50,000 from last month. In contrast 90+ and active foreclosure inventories declined yet again.

Additionally, foreclosure starts rose almost 12 percent from May 2016 but despite this monthly increase, Q2 overall saw historically low levels of foreclosure starts. The report notes that just over 210,000 borrowers that entered 2016 current on their mortgage payments are now 60 or more days delinquent. This figure is 17,000 below last year but about 10 percent higher than historical standards.

It was also found that nearly 60 percent of new seriously delinquent loans are coming from pre-crisis vintages meaning those from 2007 and earlier. This is despite those vintages making up 26 percent of active mortgages.

The report says that over the first half of 2016, it was found that one out of every 100 borrowers in a pre-2008 vintage mortgage that were current at the beginning of the year are now 60 or more days past due. This is compared to three out of every 1,000 borrowers in a 2008 or later vintage.

In addition to these findings, the total foreclosure starts have now reached what the report is calling historic norms, with Q2 2016 starts volume reaching an 11-year low. As well, over 55 percent of foreclosure starts continue to be repeats as the industry continues to work through lingering inventory from the 2008 crisis.

When the report looks specifically at first time foreclosure starts, Q2 2016’s 84,300 first time foreclosure starts denote a 20 percent decrease from Q2 2015 and the lowest volume seen on record since 2000.

With the second lowest quarter on record for first time foreclosure starts in Q1 of 2016, Q2 represents a 16 percent decrease from that quarter. The report states that April 2016 saw the lowest total foreclosure starts in 11 years and the lowest one-month volume of first time starts on record.

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