Delinquencies dropped by 15.5% in March, breaking a trend that has lasted for 20 years.

Mortgage delinquencies hit a record low in March according to the "first look" report on mortgage performance released by Black Knight. Hitting a record low is actually less interesting in this case because delinquency rates were already near all-time lows.  More interesting is that in non-seasonally adjusted terms, delinquencies dropped by 15.5%--significantly faster than the historical that's been just over 10% for the past 20 years. What's with the big change in performance?  Black Knight credits factors such as an exceptionally strong labor market, continued student loan deferrals and record low interest rates for those who refinanced in the past 2 years. Also interesting was the fact that loan prepayments actually increased in March.  This was a surprise because interest rates are typically the primary driver of prepayment activity.  Unsurprisingly, foreclosure starts and foreclosure inventory are both elevated in recent months following the lifting of the foreclosure moratorium.  This contributed to a slight year-over-year increase in active foreclosures for the first time in 10 years. That said, foreclosure starts fell 3% from last month and are holding well below pre-pandemic levels.  Foreclosure inventory is also well below pre-pandemic levels despite rising slightly in March.

Source: Mortgage News Daily