//Signs that the Fannie Mae delinquency rate is bottoming out mount

Signs that the Fannie Mae delinquency rate is bottoming out mount

Fannie Mae’s serious delinquency rate stood firm for the third month running, adding to evidence that it has hit a floor after dropping for most of the past year.

The government-sponsored enterprise’s single-family serious delinquency rate stood firm at 0.76% in January, matching its serious delinquency rate in November and December of last year, despite expectations that there would be upward pressure on delinquencies from a temporary government shutdown.

In January 2018, Fannie’s serious delinquency rate was 1.23%.

Fannie Mae delinquency rate

In comparison, Freddie Mac’s single-family serious delinquency rate ticked slightly up in January. Freddie’s delinquency rate was 0.7% during the month, up from 0.69% in December 2018, but down from 1.07% in January of last year.

Freddie’s delinquency rate dropped each month last year except between September and October. It was 0.73% both months.

The market has been expecting an eventual uptick in single-family delinquencies after a long-run of relatively higher rates in the past year. Higher rates historically have put strain on underwriting as lenders make more allowances for exceptions to offset declines in rate-driven refinancing.

Also factors in Fannie and Freddie’s overall single-family delinquency rates are poorer-performing 2005-2008 vintage loans, which run off as they age, and a long run of particularly tight underwriting in more recent years.

The multifamily delinquency rate at both GSEs remains very low, but it increased slightly at Fannie in January to 0.07% from 0.06% the previous month. A year ago, Fannie’s multifamily delinquency rate was 0.11%.

Freddie Mac’s multifamily delinquency rate was 0.01% in January. It has been at this level since April of last year. A year ago, it was 0.02%.

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