Delinquency rates in October dropped to the lowest level in at least 18 years, according to the latest Loan Performance Insights Report by CoreLogic. The report found a 1 percent decline in the overall delinquency rate compared with October 2017, when it was 5.1 percent. This was the lowest for the month of October in at least 18 years. It indicated that 4.1 percent of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in October 2018, nationally.
The foreclosure inventory rate in October 2018 recorded a decline at 0.5 percent, down 0.1 percentage point since October 2017. The October 2018 foreclosure inventory rate tied with the April, May, June, July, August and September rates this year as the lowest for any month since September 2006 and also marked the lowest rate for an October since 2005. The foreclosure rate in both instances remained 0.5 percent.
Early stage delinquencies declined to 1.9 percent in October 2018 compared to 2.3 percent around the same period last year. CoreLogic found that the share of mortgages (that were 60 to 89 days past due in October 2018) was 0.7 percent, down from 0.9 percent in October 2017. The report also revealed a decline in serious delinquency rate at 1.5 percent from 1.9 percent, the rate being the lowest for October since 2006 when it was 1.5 percent—which ties August and September 2018 as the lowest for any month since March 2007, also at 1.5 percent.
Analyzing transition rates in early-stage delinquencies, the report indicated that the share of mortgages that transitioned from current to 30 days past due was 0.8 percent in October 2018, down from 1.1 percent in October 2017. Compare this to January 2007, the current-to-30-day transition rate was 1.2 percent, while it peaked in November 2008 at 2 percent, the report noted. The report also highlighted the far-reaching impact of Hurricane Irma and Hurricane Florence in metro areas with mortgages transitioning from current to 30 days past due.
“While the strong economy has helped families stay current and push overall delinquency rates lower, areas that were hit hard by natural disasters have seen a rise in loan defaults,” said Dr. Frank Nothaft, Chief Economist at CoreLogic. “The 30-day delinquency rate in the Panama City, Florida metro area tripled between September and October 2018 as a result of Hurricane Michael. Two months after Hurricane Florence made landfall in the Carolinas, 60-day delinquency rates doubled in the Jacksonville, Wilmington, New Bern and Myrtle Beach metro areas. And buffeted by Kilauea’s eruption in the Hawaiian Islands, serious delinquency rates jumped on the Big Island by 9 percent between June and October 2018, while falling by 4 percent in the rest of Hawaii.”