US Mortgage Delinquency Rates Hit Record Low

Facts

According to the US Mortgage Bankers Association's (MBA) National Delinquency Survey, delinquency rates fell to 3.37% at the end of Q2, down 3.64% year-over-year and the lowest since the MBA began collecting data in 1979.¹
While 30-, 60-, and 90-day delinquency rates fell to 1.75%, 0.55%, and 1.07%, respectively, rates for conventional loans fell 15 basis points to 2.29%, FHA rates fell 32 basis points to 8.95%, and VA rates fell 28 basis points to 3.70%, the lowest since Q4 of 2019.²
However, FHA delinquencies rose 0.1% compared to the same period a year ago and, on a non-seasonally adjusted basis, rose 0.13% year-over-year and 0.71% from the first quarter of 2023.³
As delinquencies across all mortgage types fell during Q2, the percentage of loans on which foreclosure actions were started in the second quarter also fell by 0.03%.³
This comes despite the Federal Reserve's 5.25% interest rate increase since March 2022, resulting in higher borrowing costs across the economy, with the MBA citing a strong job market. But most homeowners are currently paying less than what's being charged for new loans.¹

Narrative A, as provided by National Mortgage News. The economy is recovering well after the COVID pandemic, and that has meant strong wage growth and historically low unemployment. When people have money, they’re able to continue making their mortgage payments, and hopefully, this lack of distress will continue.
Narrative B, as provided by CNBC. The delinquency rate is low because homeowners are terrified to sign up for record-high interest-rate mortgages, not because of a robust job market or other outside forces. The Fed’s interest rate hikes are scaring people from biting off more than they can chew and are also killing the housing market.