The rise in US mortgage delinquency rates and foreclosure filings over recent months is less steep when broken down by dollar values rather than number of loans, according to data from Black Knight.
(Bloomberg) — The rise in US mortgage delinquency rates and foreclosure filings over recent months is less steep when broken down by dollar values rather than number of loans, according to data from Black Knight.
Foreclosures have been increasing as many households face a budget squeeze from high inflation. The data is typically reported as a share of the total number of loans — but typically it’s smaller mortgages that hit trouble earlier when the economy slows. Research by Black Knight, a real estate data and analytics company, found that both delinquency and foreclosure rates are lower in aggregate dollar terms.
“Delinquencies are typically higher among lower-balance loans,” said Andy Walden, vice president of enterprise research at Black Knight. Those loans are more likely to be backed by the Federal Housing Administration and taken out by first-time buyers, and they typically feature higher loan-to-value ratios and lower credit scores, he said.
While loans taken out by first-time buyers tend to be smaller, those households also generally have fewer financial resources as well. That makes them potentially more vulnerable to foreclosure in the event of an economic challenge such as a job loss or serious illness. What’s more, they may not have owned the home long enough to have built a strong equity position.
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