Mortgage Delinquencies Hit Lowest Level Since Jimmy Carter Era, With Rates At Highest Level Since 2000

The U.S. housing market delivered some head-turning statistics this month.

On one end, mortgage rates skyrocketed to a level not seen since 2000. On the other, delinquencies have plummeted to their lowest point since the late 1970s.

What's Going On? U.S. 30-Year fixed-rate mortgage surged to 7.46% on Thursday, the steepest since October 2000, with the escalation tracing back to the behavior of 30-Year Treasury yields, according to Christophe Barraud, chief economist and strategist at Market Securities.

30-Year Treasury yields have recently seen a noticeable uptick, Barraud said, especially in the wake of a substantial $23-billion bond auction.

Freddie Mac’s lagging data complements the narrative, the chief economist said, showing the 30-year fixed-rate mortgage averaged 6.96% as of Aug. 10, marking a third consecutive week of increases.

The meteoric rise in rates hasn’t gone without consequences, Housing Wire said, calling on Mortgage Bankers Association (MBA) data, as there has been a decrease in mortgage purchase applications for four consecutive weeks, totaling a decline of 12% over the last six weeks.

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Delinquencies: While mortgage rates are capturing headlines with a sharp ascent, delinquencies are making news for the opposite reason.

The MBA recently reported that mortgage delinquency rates reached the lowest point since its records began 43 years ago, suggesting a potential economic turnaround.

The specifics are telling; the seasonally adjusted delinquency rate for one-to-four-unit residential properties was marked at 3.37% in the second quarter, down 19 basis points quarter-over-quarter, and down 27-basis points year-over-year.

Conversely, FHA-backed loans, typically aimed at low-income and first-time buyers, registered an uptick in delinquencies, moving up to 8.95% in the second quarter, an indication that the low-income homeowner may be struggling to make ends meet.

The Larger Real Estate Picture: As mortgage rates pivot upward, a significant portion of homeowners continue to benefit from sub-5% interest rates. Even with rising rates, the inertia of previously advantageous rates from the past seems to be influencing homeowner decisions now with the "lock in" effect.

Further, data from the National Association of Realtors indicates a 2.4% year-over-year decline in the median home price in the second quarter.

Read next: How the Fed’s Historic Interest Rate Hike Affects Your Wallet: Credit Cards, Mortgages, Stock Portfolios And More

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