By Peter Ricci
The U.S. mortgage delinquency rate declined by 10.6 percent year-over-year in the August First Look report from Lender Processing Services, an analytics firm that studies the mortgage markets and real estate industries.
A study of approximately 70 percent of the overall mortgage market, the First Look report covered mortgage performance statistics for the month of August 2012.
LPS First Look Report – A Light in August
Based on additional data in the First Look report, it appears that the mortgage markets continue to improve with the housing market, with delinquency rates and the overall number of distressed properties all declining from last year:
- The percentage of mortgages that are delinquent has steadily fallen, declining from 7.68 percent in August 2011 to 7.03 percent in July 2012 and 6.87 percent in August 2012.
- Numerically, delinquent properties have fallen from 2.24 million in August 2011 to 1.91 million in August 2012.
- The number of seriously delinquent properties has also fallen, dropping from 1.72 million last August to 1.52 million in August 2012.
- All together, the total number of properties either delinquent or in foreclosure has fallen from 6.08 million in August 2011 to 5.45 million in August 2012.
U.S. Mortgage Markets – Gradually Improving
LPS's First Look data is largely consistent with that of the Mortgage Bankers Association, which reported last month in its National Delinquency Survey that delinquency rates on one-to-four unit residential properties had declined by 10 percent year-over-year in 2012's second quarter.
Though delinquency rates and foreclosures remain relatively high (a fact that Bill McBride noted on Calculated Risk), it's worth mentioning that the post-boom mortgage markets are noticeably healthier than that of the housing boom years. In the National Delinquency Survey, for instance, 59 percent of delinquent mortgages had originated between 2005 and 2007, and just 3 percent originated after 2010; also, Fannie Mae's latest analysis of its own balance sheets reported similar findings on recent mortgage performance.
So like most of the housing market, delinquencies and foreclosures continue to improve, albeit slowly – but of course, after years of downturns, even steady progress is a good sign for the market.