Good news for homeowners: Mortgage delinquencies are on the decline, dropping to their lowest point since October 2023, according to Intercontinental Exchange’s (ICE) First Look at January 2024’s mortgage performance data.

The national mortgage delinquency rate dipped to 3.38% in January, marking a welcome fall from the holiday-driven bump seen in December 2023 but flat compared to a year ago. This means fewer homeowners were behind on their mortgage payments in January.

A “delinquent” mortgage is when borrowers are past due on mortgage payments by 30 days or more but are not yet in active foreclosure. Past-due mortgages across the board saw a decrease, thanks to fewer new delinquencies and more borrowers catching up on their home loan payments, ICE found.

Even serious delinquencies (loans 90 days or more behind but not in active foreclosure) fell by 109,000 loans in January, down 19% compared to a year ago, ICE reported. The total number of seriously delinquent loans stood at 470,000 as of January.

While past-due mortgage payments are trending down, January saw a 43.3% year-over-year jump in foreclosure starts to a level of 34,000—the highest since April 2022, ICE reported. This increase is partly due to seasonal trends.

Meanwhile, loans in active foreclosure rose marginally by 7,000 to 219,000 foreclosures in January. However, this is 23% lower than pre-pandemic levels, ICE said.

So what causes homeowners to get behind on their mortgage payments? The vast majority of loan defaults are triggered by a negative life event, according to research from the University of Chicago. In fact, researchers found that 94% of mortgage defaults stem from cash-flow issues following a financial hardship, such as a job loss, illness, injury or divorce.

Still, the bigger picture from ICE’s January mortgage performance numbers is reassuring. The number of loans in active foreclosure remains significantly lower than pre-pandemic levels, and most seriously delinquent borrowers are still protected from foreclosure.’

Mortgage prepayment activity is also on the rise. With interest rates dropping slightly in December and January, refinancing and homebuyer demand got a slight boost, leading to more homeowners paying off their loans early.

Deborah Kearns is a freelance editor and writer with more than 15 years of experience covering real estate, mortgages and personal finance topics.

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