Key takeaways from this month’s findings include:

• Prepayments rebounded: The single-month mortality (SMM) rate, a measure of prepayment speed, increased by 10 basis points (bps) in February to 0.82% and was up 80% from the same time last year. The uptick follows a refinance wave driven by January rate drops.
• Delinquencies edged up in February: The national delinquency rate rose by 7 bps in February to 3.72%, driven by a 4% seasonal rise in early (30-day) delinquencies and a 3% rise in seriously delinquent (90-plus day) loans. The rate is up 20 bps from the same time last year but remains 12 bps below its February 2020 pre-pandemic benchmark.
• Combined serious delinquency and foreclosure volumes increased: At the end of January, 878,000 loans were in a state of severe delinquency or foreclosure. That figure is up 175,000 (25%) over the past four months, the highest since June 2022, and the highest since June 2018 when excluding the immediate effect of the pandemic. FHA loans account for roughly 80% of the recent increase.
• Cure rates have slowed: The rise in seriously delinquent loans is driven primarily by a decline in cure activity rather than a spike in new defaults. While the number of new loans that have become 90-plus days delinquent over the past four months has remained roughly flat on an annual basis, cure rates among 90-plus day delinquent mortgages are down by more than 40%.
• Foreclosure activity is rising off recent record lows: February saw 35,000 foreclosure starts, down 16% from January but up 7% year over year. Foreclosure sales declined 13% in the month but rose 25% year over year. The share of loans in active foreclosure remains 6 bps below pre-pandemic levels, though it rose by 4% in February and is up 25% from a year ago.