25 states with high rates of mortgage delinquencies
In this article, we will list the 25 states with the highest mortgage delinquency rates. We'll start by discussing the latest news and trends in real estate prices and mortgage delinquencies. If you want to jump straight to the top 11 on our list, go to the 10 states with the highest mortgage delinquency rates.
Homebuyers in the United States are facing record-high interest rates. The average 30-year fixed mortgage rate is currently hovering around 6.8%, which is 2.5 times higher than the record lows seen at the beginning of 2021. In theory, this should lead to a decrease in home prices, as demand for housing declines with rising mortgage rates. However, as we saw in our article about the largest cities with the highest home price growth since the pandemic, they are actually increasing.
The American real estate market is returning to its pre-pandemic trend of home price growth, increasing by nearly half a percent each month. According to CNBC, home prices rose by 0.6% month-over-month in February of this year. So, what is keeping home prices elevated despite the record-high 30-year mortgage rate?
Economists from the Federal Housing Finance Agency have published a study that may answer this question. According to the study, the fixation effect is responsible for about 1.3 million fewer home sales in America between the second quarter of 2022 and the fourth quarter of 2023.
In the context of mortgage rates, the lock-in effect refers to the situation where homeowners do not find it economically viable to sell their homes because their current mortgage rates are lower than what they could get for a new one. According to an analysis by The New York Times, about 70% of all mortgage holders currently have rates that are more than 3% lower than current rates. As there is a shortage of housing in the real estate market, prices are rising.
Amid rising home prices and mortgage interest rates, construction companies that offer reasonably priced housing options are becoming even more important. One such company is KB Home (NYSE: KBH), which is also one of the nation's largest real estate developers.
Mortgage delinquency in the United States has been increasing recently. In the fourth quarter of 2023, there was a recorded increase of 7 basis points in the overall mortgage delinquency rate compared to the third quarter of the year. The five states with the largest quarterly increase in the overall mortgage delinquency rate were Louisiana, West Virginia, Illinois, Texas, and New Mexico. Four of these states are also on our list of the 25 states with the highest rates of delinquent mortgages. Additionally, the overall 90-day mortgage delinquency rate in the U.S. increased by 27.9% in the fourth quarter of 2023 compared to the fourth quarter of 2022. As of the end of the fourth quarter of 2023, the mortgage delinquency rate in the United States stands at 0.58%.
Our analysis of the 90-day delinquent mortgage debt indicators from the fourth quarter of 2020 to the fourth quarter of 2023 showed that the rate increased for most states on our list during this period. While the 90-day mortgage delinquency rates for 24 states on our list decreased between 2020 and 2021, only nine states had a lower rate by the end of 2023 compared to the end of 2020. Additionally, although all states had a 90-day mortgage delinquency rate of less than 1% in 2021, two states had a rate exceeding 1% in 2023. Furthermore, one of the states on our list nearly doubled its 90-day mortgage delinquency rate over the three years.
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