GNMA Delinquency Upward Trend

GNMA delinquencies seem to be on a fairly consistent upward trend. The graph above shows 1-3 month delinquent loans (percent of total), by quarter, dating back to 2022. Two things jump out:

1. There is a seasonality to government delinquencies. They peak at year-end, and then catch up with payments by the end of the first quarter.
2. The yearly trend is undeniably upwards. The linear slope of the trendline is relatively consistent year-to-year, but the absolute percent increases annually. If this trend continues, GNMA 1-3 month delinquencies could reach 7.22% by year-end.

While possibly good for late fees (if collectible), a bigger concern would be the probability of these 1-3 months delinquent migrating to >=4 months. As of now, these migration factors appear to be relatively constant.

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