December 2018 Mortgage Monitor
Active Foreclosure Rate and Inventory End 2018 Below Pre-Recession Averages; Total Year Foreclosure Starts and Sales Hit More Than 18-Year Lows
- All four major performance metrics – delinquencies, serious delinquencies, active foreclosures and total non-current inventory – ended the year below 2000-2005 pre-recession averages for the first time since the financial crisis
- Both the national foreclosure rate and active foreclosure inventory have fallen below long-term norms; at the current rate of decline, both would reach near-record lows by the end of 2019
- 576,000 foreclosures were initiated in 2018, the lowest such annual total in more than 18 years
- First-time foreclosures were also at historic lows, with over 60 percent of foreclosure referrals last year being repeat actions, the highest share ever recorded
- Foreclosure sales (completions) hit a low of more than 18 years; 2018’s 175,000 foreclosure sales were down 25 percent from the year prior, and were 40 percent below their pre-recession average
JACKSONVILLE, Fla. – Feb. 4, 2019 – Today, the Data & Analytics division of ICE released its latest Mortgage Monitor Report, based upon its industry-leading loan-level mortgage performance database. With full-year mortgage performance data in, this month’s report looked at 2018 in review. As explained by Ben Graboske, president of Data & Analytics division, more than a decade past the start of the financial crisis, most metrics reflect a recovery to their long-term, 2000-2005 pre-recession averages.
“Across the board, 2018 year-end numbers are good news from a mortgage performance perspective,” said Graboske. “All four major performance metrics – delinquencies, serious delinquencies, active foreclosures and total non-current inventory – ended the year below pre-recession averages for the first time since the financial crisis. Just 576,000 foreclosures were initiated throughout the entirety of 2018 – an 18-year low – and the vast majority of these were repeat actions. In fact, first-time foreclosures were down 18 percent from the year before, hitting the lowest point we’ve seen since ICE started reporting the metric in 2000. Even repeats – though making up more than 60 percent of all foreclosures – were down 6 percent from 2017.
“These year-end numbers are further proof of what we’ve been observing for some time now. The high credit quality and corresponding lower risk we’ve seen in the post-crisis origination market for the better part of a decade continues to pay dividends in terms of mortgage performance. In addition, the low interest rate environment we’ve enjoyed for so long had – until very recently – resulted in a refinance-heavy blend of originations for years. Refis, as a whole, tend to outperform their purchase mortgage counterparts, which has boosted mortgage performance as well. On top of that, we’ve had the benefit of strong employment and housing markets, which have helped the vast majority of homeowners meet their debt obligations, while those few who may have faced a possible default have gained enough equity to be able to sell rather than face foreclosure.”
As the average interest rate on a 30-year mortgage ticked down again in January, falling below 4.5 percent for the first time since April 2018, ICE revisited the impact this change has had on the refinanceable population. The decline in rates has returned the interest rate incentive to refinance to 1 million homeowners, a 50 percent increase in rate/term refinance incentive over just the last two months. There are now 2.9 million homeowners with mortgages who could likely qualify for a refinance under broad-based criteria and also reduce the interest rate on their first mortgage by at least 0.75 percent by doing so, the largest this population has been since January 2018. Even if rates should hold steady – and certainly if they fall further – this could lead to an unexpected bump in refinance volumes in early 2019.
As was reported in ICE’s most recent First Look news release, other key results include:
| Total U.S. loan delinquency rate: | 3.88% |
| Month-over-month change in delinquency rate: | 4.71% |
| Total U.S. foreclosure pre-sale inventory rate: | 0.52% |
| Month-over-month change in foreclosure pre-sale inventory rate: | 1.19% |
| States with highest percentage of non-current* loans: | MS, LA, AL, WV, AR |
| States with lowest percentage of non-current* loans: | ND, ID, WA, OR, CO |
| States with highest percentage of seriously delinquent** loans: | MS, LA, AL, AR, NC |
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state
**Seriously delinquent loans are those past-due 90 days or more.
Totals are extrapolated based on ICE’s loan-level database of mortgage assets.
About Mortgage Monitor
ICE manages the nation’s leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the ICE Home Price Index and ICE Valuation Analytics’ home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of U.S. residential properties down to the ZIP-code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.
ICE’s research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: Data Reports
About Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges – including the New York Stock Exchange – and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines and automates industries to connect our customers to opportunity.
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