The fourth quarter delinquency rate was 28 basis points above the previous quarter and three basis points higher than the fourth quarter of 2015.
Delinquency of at least 30 days on home loans, including loans in the foreclosure inventory, closed out the fourth quarter of past year at 6.33 percent. It is not unexpected that delinquencies could eventually increase off such a low base. (All 80% LTV loan reports include the origination fee.) For mortgages with jumbo loan balances, the average contract interest rate ($424,100 or greater) increased to 4.28% from 4.27%, with points for 80% LTV loans decreasing to 0.27 from 0.31. This quarter's increase was driven primarily by the FHA 30-day delinquency category, which increased 55 basis points over the quarter.
There was a bit of an awkward seesaw ride taking place in newly released mortgage data, with the delinquency rate taking an uptick while the average FICO score level headed south. The VA share decreased to 11.8% from 12.7%.
A slowdown in refinancing pulled down the total mortgage application volume last week as changes to certain government-loan programs made refinances less lucrative.
Higher overall housing costs are causing more borrowers to opt for adjustable-rate mortgages, which reached their highest level in over a year. The seasonally-adjusted Purchase Index decreased 5%, and the unadjusted Purchase Index increased 1%. On a year-over-year basis, the conventional delinquency rate increased by 6 basis points. Foreclosure starts in the fourth quarter decreased across all loan types - FHA, VA and conventional. New Jersey and NY continued to have the highest percentage of loans in foreclosure, at 5.42 percent and 4.28 percent, but also continued to show improvement from the previous quarter.
Walsh notes that more than 70% of the loans that were in serious delinquency in the fourth quarter were legacy loans originated in 2007 or earlier.