Natural disasters are causing mortgage delinquencies to reach their highest level in three years

Natural disasters pushed the number of mortgage delinquencies to the highest level in three years in November, according to a report on ICE.

Industry experts recommend closely monitoring the trend, but note that the percentage of borrowers missing payments remains low compared to the long-term average. The concerns are mainly concentrated in the government portfolio, especially the Federal Housing Administration (FHA) mortgages.

ICE data shows that loans 30 or more days past due – but not under foreclosure – rose to 3.74% in November, after six straight months of increases.

This represents 2.027 million properties, an increase of 159,000 compared to October and 224,000 compared to November 2023. The increase is due to typical seasonality, with Thanksgiving falling later in the month, combined with post-hurricane distress.

“Delinquencies have increased year over year in each of the past six months as the tide has clearly turned toward a modest shift higher,” Andy Walden, vice president of research and analytics at ICE, said in a statement. “They remain well below the long-term average, but given the larger-than-expected increase in November, it is worth keeping a close eye on mortgage performance as we move into 2025.”

Hurricanes Helene and Milton caused 14,000 new delinquencies in November, bringing the total to 56,000, while another 5,000 are attributed to Hurricane Beryl.

The number of serious delinquencies – loans that are 90 or more days past due – reached 512,000 in November, up 32,000 from the previous month and 53,000 year over year. This is the highest level since February 2023.

However, foreclosure activity remains subdued. The pre-sale foreclosure inventory rate was 0.34%, with 21,000 foreclosures recorded in November, down 29% month-on-month and from the same period last year.

Interest on early repayments fell to 0.63% in November, a decline of 25% month-on-month due to rising mortgage rates, but was 71% higher than in the same period last year.