With steady home price appreciation and falling interest rates, by some measures the shares of distressed mortgages existing in the market shrunk to record lows, according to Black Knight. December’s foreclosure rate dropped to 0.46%, the lowest recorded percentage since the close of 2005.
Delinquencies fell by 3.75% month-over-month in December, according to the latest Mortgage Monitor report, while the foreclosure rates fell 1.57%. Year-over-year, delinquencies declined by over 12%.
Additionally, Black Knight found that there are now 2.05 million loans in some stage of delinquency, including active foreclosures down 236,000 from the same time last year and the lowest year-end volume since the turn of the century. The strongest declines were primarily in the east and southern portions of the country and in areas heavily impacted by the 2017 and 2018 hurricane seasons.
Southern states including Mississippi, Louisiana, Alabama, and Arkansas held some of the largest volumes of non-current loans in the country. As of December 2019, Mississippi holds the highest volume at 9.99%.
Black Knights’ report also covered home price growth. Growth fell from nearly 7% in early 2018 to 3.8% in August 2019, but it gained almost a full percentage point over the last four months of 2019—reaching 4.7% to close the year.
“With home price growth accelerating, today’s low-interest-rate environment has made home affordability the best it’s been since early 2018,” said Black Knight Data & Analytics President Ben Graboske. “Despite the average home price increasing by nearly $13,000 from just over a year ago, the monthly mortgage payment required to buy that same home has actually dropped by 10% over that same span due to falling interest rates.”