Will Mortgage Prepayments Spring Back?

The decline in mortgage rates in the recent months hasn't impacted the mortgage prepayment rate, which was the lowest in more than 18 years, according to Black Knight's latest First Look, a high-level data report that is released before the company's monthly Mortgage Monitor report.

The reason, the report revealed, was the slowdown in home sales, despite an increase in refinance incentives from the falling rates. However, the report said that this could be due to the seasonality of the market, with January and February being the low seasons for home sales historically. It indicated that prepays could pick up during the spring homebuying season if the rates remained low.

The data, which also looks at mortgage delinquencies and foreclosures, indicated that the national delinquency rate in January fell to 3.75 percent after rising on a seasonal basis in the previous months and was now 13 percent below the level during the same period last year.

Even though foreclosure starts indicated a month-over-month increase, they remained down 19.4 percent on a year-over-year basis. The number of loans in active foreclosure also continued to decline, falling to 265,000, down by 72,000 from last year. According to the report, this foreclosure inventory is also "the smallest it's been since May 2006."

Properties that are 30 days past due fell to around 1.9 million, declining by 257,000 year-over-year. Properties that were 90 days past due also fell 203,000 year-over-year to 504,000, the report indicated.

Mississippi led the top five states by non-current percentage with homes that remained past due at 10.10 percent. However, Mississippi's noncurrent percentage declined 7.77 percent from the same period last year.  Louisiana, Alabama, West Virginia, and Arkansas were the other states where the non-current levels remained high.

Utah topped the states that saw the lowest percentage of non-current mortgages at just 2.45 percent, declining 16.25 percent compared to last year. Idaho, Washington, Oregon, and Colorado were other states where the non-current levels remained low.