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How Natural Disasters Are Influencing Delinquency Rates

Delinquency is down while equity is up, according to the latest Loan Performance Insights report from Corelogic [1]. According to the report, 4.1 percent of mortgages were 30 days or more delinquent as of December 2018, a 1.2 percent decline from December 2017’s 5.3 percent.

Despite the decrease, recent natural disasters such as hurricanes have left states such as North Carolina, Florida, and Georgia behind. According to Corelogic, 10 out of the only 12 metro areas to experience increases in serious delinquency, or loans 90 days or more past due, were located in the Southeast, in areas such as Panama City, Florida.

"On a national basis, income and home-price growth continue to support strong loan performance,” said Corelogic President and CEO Frank Martell. “Although things look good across most of the nation, areas that were impacted by hurricanes and other natural hazards are experiencing a sharp increase in the numbers of mortgages moving into 60-day delinquency or worse. One specific example is Panama City, Florida, which was devastated by Hurricane Michael, where 60-day delinquencies rose to 3.5 percent in December."

On a state by state basis, every state in the U.S. except one saw serious delinquency decrease. North Dakota experienced no change in serious delinquency rates. Additionally, the 30-plus delinquency rate is currently at a 10 year low. The share of mortgages that transitioned from current to 30-days past due was 0.9 percent in December 2018, down from 1.2 in December 2017.

Meanwhile, while delinquency has fallen, home equity has gone up. Frank Nothaft, Chief Economist of Corelogic, noted that homeowners saw a $9,700 increase in their homes equity in 2018. Nothaft notes how the increases in equity may impact foreclosure and delinquency rates.

“With additional ‘skin in the game,’ rising equity reduces the chances of a foreclosure, helping to push the foreclosure rate down to its lowest level since at least 2000," said Nothaft.

Find the full Loan Performance Insights report here. [1]