WASHINGTON — The Mortgage Bankers Association released the second quarter 2006 delinquency rates last week for one-to-four unit residential properties, and the results are a mixed bag.
Overall, the delinquency rate stood at 4.39% in the second quarter, down two basis points from the first quarter, and up five basis points from a year ago.
The MBA said the decline in the overall delinquency rate was driven by "significant decreases" in the delinquency rate for loans in the 90 days or more past due category, particularly in Louisiana and Mississippi.
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The seasonally adjusted delinquency rate increased during the second quarter for all loan types, except VA loans–four basis points for prime loans, 20 basis points for subprime loans, and 22 basis points for FHA loans. The rate for VA loans decreased four basis points.
Delinquency rates for prime, subprime and FHA loans increased on a seasonally adjusted basis compared to the first quarter.
In addition, all adjustable rate loans had higher seasonally adjusted delinquency rates compared to the first quarter 2006.
Fixed rate mortgage loans were either unchanged or had a decline in delinquencies.
The percentage of loans in the foreclosure process was up one basis point from the first quarter 2006, while the percentage of loans entering the foreclosure process was up two basis points.
MBA Chief Economist and Senior Vice President of Research and Business Development Doug Duncan observed that the economy and housing market slowed in the second quarter 2006, and the pace of job growth has slowed as has home price appreciation in response to higher interest rates and rising inventories of unsold homes.
To this point, said Duncan, "generally healthy economic growth and labor markets have kept delinquency rates from rising. However, we are seeing increases in delinquency rates for subprime loans, particularly subprime ARMS. It is not surprising that subprime borrowers are more susceptible to these changes."
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