What’s default rate of mortgage loans

The default rate for mortgage loans has been on the rise, indicating a potential increase in the number of borrowers who are falling behind on their mortgage payments:

1. **Trends**: The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.88% of all loans outstanding at the end of the fourth quarter of 2023. This is up from the third quarter of 2023 and indicates a growing number of borrowers who are having difficulty making their mortgage payments.
2. **FHA Delinquencies**: FHA delinquencies were up 131 basis points, which is a significant increase and suggests that borrowers with FHA-insured mortgages are particularly affected by the rising delinquency rates.
3. **Conventional Loans**: The total delinquency rate for conventional loans increased 11 basis points to 2.61% over the previous quarter. This is a smaller increase compared to FHA delinquencies but still indicates a growing number of borrowers who are falling behind on their payments.
4. **VA Loans**: The delinquency rate for VA loans also increased, although this was due to a foreclosure moratorium being lifted by the Department of Veterans Affairs. Once the moratorium ended, the number of VA loans that were delinquent but not in foreclosure increased.

In conclusion, the default rate for mortgage loans has been on the rise, with FHA borrowers being disproportionately affected. This trend is likely influenced by factors such as higher interest rates, increased property taxes and insurance, and a rise in credit card debt and delinquency. While the overall delinquency rate remains low compared to historical averages, the increasing trend is a cause for concern and suggests that some borrowers are facing financial challenges.