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How Oil Prices Impact Mortgage Default

Oil moneyAccording to data published Tuesday in CoreLogic’s Loan Performance Insights Report, 4.6 percent of mortgages nationally were in some stage of delinquency, defined as 30 days or more past due, as of August 2017. This number represents a 0.6 percentage point year-over-year decline compared to August 2016’s delinquency rate of 5.2 percent.

According to the report, August 2017’s foreclosure inventory rate was down to 0.6 percent from 0.9 percent in August 2016. This marked the lowest foreclosure inventory rate for the month of August since it was 0.5 percent in August 2006.

CoreLogic said that early-stage delinquencies, defined as 30-59 days past due, were at 2 percent for August 2017, marking a drop from 2.1 percent from August 2016. Meanwhile, mortgages 60-89 days past due were unchanged at 0,7 percent.

Finally, CoreLogic states that serious delinquencies, defined as 90 days or more past due, were at their lowest level since 2007 when the rate was 1.9 percent in October of that year and 1.7 percent in August. August 2017’s serious delinquency rate was down to 1.9 percent from 2.4 percent in August 2016. While overall delinquency rates were down, CoreLogic reported that Alaska and other areas dependent on oil experienced increases in delinquency rates.

“Crude oil prices this August were less than half their level three years ago. This has led to oil-related layoffs and an increase in loan delinquency rates in states like Alaska and in oil-centric metro areas like Houston,” said CoreLogic chief economist Dr. Frank Nothaft.

The CoreLogic report also states that early-stage delinquency rates can be volatile, so studies also analyze transition rates, defined as the transition of a mortgage from current to past due. CoreLogic said that the share of mortgages that went from current to 30 days past due was unchanged from August 2016 at 0.9 percent for August 2017.

“Serious delinquency and foreclosure rates are at their lowest levels in more than a decade, signaling the final stages of recovery in the U.S. housing market,” said CoreLogic CEO and President Frank Martell.


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