Mortgage prepayments, generally a good indicator of refinance activity, skyrocketed in August.  According to Black Knight Financial Services "first look" at its August mortgage data, the Single Month Mortality (SMM) or prepayment rate, fueled by post-Brexit interest rates, rose by 32 percent from July to hit a rate of 1.67 of all outstanding mortgages.  It was the highest SMM rate in more than three years.

After spiking in July, delinquencies fully recovered in August.  The rate of 30-day or more delinquencies was down 6.04 percent month-over-month and 11.41 percent on an annual basis to 4.24 percent.  There were 2.15 million mortgages past due at the end of the month, a decline of 135,000. Serious delinquencies, loans 90 days or more past due but not yet in foreclosure, accounted for 669,000 of the total, a decline of 26,000 from July and 156,000 from the previous August.

The pre-sale or foreclosure inventory, homes in the legal process of foreclosure, numbered 527,000, 23,000 units fewer than in July and down 221,000 from a year earlier.  The inventory represents 1.04 percent of all active mortgages, a rate that declined 4.25 percent for the month and is about 30 percent lower than in August 2015.  The inventory of loans in foreclosure has now declined for 19 consecutive months and in all but one of the past 52 months.

There were 68,000 foreclosure starts in August, up by 12.2 percent from June but almost 10 percent lower than the previous August.  At the end of the month there were 2.68 million distressed properties including those 30 or more days past due and those in foreclosure. 

Actual foreclosures were at a rate of 2.5 percent, based on the universe of homes that were more than 90 days past due.

Mississippi, Louisiana, New Jersey, Alabama, and West Virginia are the states with the highest levels of non-current loans. While rates are trending down in all five states they still are within the range of 7.81 percent in West Virginia to 11.09 percent in Mississippi.

Additional details on August mortgage performance will be published in Black Knights Mortgage Monitor which will be available by October 3.