Housing Market and Mortgage Conditions in the Ninth District

To enhance understanding of conditions in the mortgage and housing markets in the Ninth Federal Reserve District and nationwide, we offer visual representations of Mortgage Originations, Mortgage Performance, and Home Prices on the tabs below. Note: The Mortgage Originations tab shows characteristics of new loans as of the time they are made, while the Mortgage Performance tab shows payment-related activity after origination.
Data sources: Lender Processing Services and CoreLogic.

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Last updated March 10, 2014

Home Purchase

Figure 1

Number of Home Purchase Mortgages Originated, Monthly (light line) and 12-Month Moving Average (dark line)

NOTE: THE HIGH AND LOW POINTS OF THE LIGHT LINE REFLECT SEASONAL VARIATIONS IN HOME BUYING.

At a Glance

The number of home purchase mortgage originations decreased significantly after 2007 and has not yet recovered. Nationally, originations continue to trend downward. In the Ninth District, the 12-month moving average of originations trended slowly upward from mid-2011 through 2012 but tailed off slightly in late 2013.

Figure 2

Monthly Average (Mean) of Borrowers’ Credit Scores at the Time of Origination
For Federal Housing Administration (FHA)-Insured and Veterans Administration (VA)-Guaranteed and Conventional Home Purchase Mortgages, on a Scale from 350 (high credit risk) to 800 (low credit risk)

At a Glance

In each category, the mean credit score rose significantly between 2007 and 2009 and has remained elevated. However, mean scores declined somewhat in 2013, especially for FHA-insured and VA-guaranteed mortgages.

Figure 3

Monthly Share of New Home Purchase Mortgages Insured by the FHA or Guaranteed by the VA

At a Glance

FHA-insured and VA-guaranteed loans became a much larger share of all home purchase mortgages at the outset of 2008. By 2009, they made up the majority of home purchase loans. Their market share has dropped since 2010 and fell sharply in 2013, from nearly 40 percent at the beginning of the year to about 25 percent in December.


Home Refinance

Figure 4

Number of Mortgages Refinanced, Monthly (light line) and 12-Month Moving Average (dark line)

At a Glance

The pace of home mortgage refinancings varies significantly over time. In 2013, a late-spring rebound in mortgage interest rates contributed to a sharp decline in refinancings nationally and in the Ninth District, with the Ninth District’s monthly volume in late 2013 falling to its lowest level in over a decade and its 12-month average volume falling to its lowest level in five years.

Figure 5

Monthly Average (Mean) of Borrowers’ Credit Scores at the Time of Origination
For FHA-Insured and VA-Guaranteed and Conventional Home Refinance Mortgages, on a Scale from 350 (high credit risk) to 800 (low credit risk)

At a Glance

Mean credit scores for refinancings rose significantly after 2007 and remain well above their earlier levels. In 2013, however, the mean score in each category fell to levels not seen in at least four years, as refinancing volume fell faster among high-score borrowers than among low-score borrowers. This trend reversed slightly in December, however.

Figure 6

Monthly Share of Mortgage Refinancings Insured by the FHA or Guaranteed by the VA

At a Glance

FHA/VA loans represented over one-third of all Ninth District home refinance mortgages at the peak of the 2008 financial crisis, but their market share fell back to 10 percent by late 2011 and remained just above that level until late 2013, when it fell below 10 percent. In other words, during the steep decline in mortgage refinancings in 2013, FHA/VA refinancings dropped at a somewhat faster rate than conventional refinancings.

The Incidence of Mortgage Problems

These calculations are based on the monthly number of loans identified (by their mortgage servicer) as being in varying stages of delinquency, foreclosure, or post-foreclosure status. For each stage, the number of problem mortgages is then divided by the total number of active loans for each month to produce the respective rate.

Note: For the Montana and North Dakota counties shown in white on the maps below, results are not available due to insufficient data.

Figure 7

Early-Stage (30–89 Days) Delinquency Rate by Month

At a Glance

Early-stage delinquency rates in the Ninth District rose after 2006, peaked in late 2008, have generally trended down since then, but remain above their 2004–2005 levels. The rates tend to reach their annual lows early in each year and then bounce back. The delinquency rate for the Ninth District remains well below the national rate.

Figure 8

Current Early-Stage (30–89 Days) Delinquency Rate by County

At a Glance

As of December 2013, early-stage delinquency rates are moderately high in much of the eastern and far western portions of the Ninth District. The highest and lowest rates in the Ninth District are in counties in the Dakotas and eastern Montana that have relatively few active loans.

Figure 9

Late-Stage (90+ Days) Delinquency Rate by Month
(Excludes Foreclosed Mortgages)

At a Glance

Late-stage mortgage delinquencies peaked in early 2010, declined sharply by 2011, and eased further through mid-2013. Since then, the national late-stage delinquency rate has continued to fall, but the Ninth District’s rate, though much lower, has changed little. The national and Ninth District rates remain well above their 2004–2005 levels.

Figure 10

Current Late-Stage (90+ Days) Delinquency Rate by County
(Excludes Foreclosed Mortgages)

At a Glance

As of December 2013, the highest rates of late-stage mortgage delinquency in the Ninth District are in several rural counties, mainly in South Dakota, that have relatively few active loans. The Ninth District’s lowest rates are often nearby, in other low-volume counties of the Dakotas and eastern Montana.

Figure 11

Foreclosure Rate by Month

At a Glance

Foreclosure rates remain above their 2004–2005 levels, but the clear downward trend that began in 2012 has continued. In the fall of 2013, the Ninth District’s foreclosure rate fell below 1 percent for the first time since 2008, and the national rate fell below 2.5 percent.

Figure 12

Current Foreclosure Rate by County

At a Glance

As of December 2013, mortgage foreclosure rates were somewhat elevated in the Ninth District’s Wisconsin and western Montana counties. Counties with relatively few active loans but some of the highest and lowest foreclosure rates in the Ninth District are scattered across North and South Dakota.

Figure 13

Rate of Real Estate Owned (Post-Foreclosure) by Banks, by Month

At a Glance

The real estate owned (REO) rate has been higher in the Ninth District than in the nation since REO rates began shooting up in 2006. Ninth District and national REO rates remain elevated relative to 2004–2005, but the gap narrowed in 2013, when the Ninth District rate dropped significantly while the national rate fell little overall. Some sharp changes in the rate, such as in 2009 and 2011, may be due in part to changes in the composition of the group of servicers reporting data.

Figure 14

Current Rate of REO by County

At a Glance

As of December 2013, REO rates are generally somewhat higher in the eastern portion of the Ninth District. However, the highest rates in the Ninth District are in a few counties in South Dakota with relatively few active loans.

Figure 15

Home Price Index (Year 2000=100)

At a Glance

The price index reported is for the entirety of each state (rather than the Ninth District portion, in the cases of Michigan and Wisconsin). The dotted line shows the national price index. Housing price indices rose in all Ninth District states between December 2012 and December 2013. These gains were strongest in Michigan (14 percent), the nation (11 percent), and Montana (9 percent); intermediate (5 to 6 percent) in Minnesota and the Dakotas; and weakest in Wisconsin (0.8 percent). Michigan’s increase brought its index almost back to its year 2000 level, while Montana’s index rose almost back to its August 2007 peak. For 2013 as a whole, the North and South Dakota indices were at record highs. Slight declines late in 2013 in Minnesota, South Dakota, Wisconsin, and Michigan may reflect seasonal factors. Across the housing price boom, bust, and recovery period from 2000 to 2013, housing price growth has averaged about 5 percent per year in North Dakota and Montana, about 2 to 3 percent per year in South Dakota, Minnesota, and Wisconsin, and essentially zero in Michigan.

Data Overview

Figures on the Mortgage Origination and Mortgage Performance tabs reflect Federal Reserve Bank of Minneapolis staff calculations based on data on first-lien mortgages provided by Lender Processing Services (LPS). These data are made up mainly of the servicing portfolios of the largest residential mortgage servicers in the U.S. The figures on the tab do not represent the total number of residential mortgages in each geography. Rather, they represent the unadjusted loan counts from the LPS source databases. As of January 2014, LPS provided monthly loan-level information on approximately 31 million active loans in the U.S., including an estimated 70 percent of the total number of first-lien mortgages. However, coverage varies by category and geography.

Figures on the Home Prices tab reflect Federal Reserve Bank of Minneapolis staff calculations based on Home Price Index (HPI) data provided by CoreLogic. The HPI measures the change in home prices using a repeat sales methodology.


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