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Things That Go Down, Must Go Up?

delinquent-noticeIn it’s April 2017 Mortgage Performance Report [1], CoreLogic, a global property information, analytics, and data-enabled solutions provider, showed 4.8 percent of mortgages were in some stage of delinquency, meaning they were 30 days or more past due, including those in foreclosure. In overall delinquency, this continues its decline representing 0.5 percentage point regression compared to April 2016’s 5.3 percent.

The share of mortgages in some stage of the foreclosure process, or foreclosure inventory rate, was 0.7 percent. This is slightly down from April 2016 when the rate was 1 percent. Serious delinquencies, which are 90 days or more past due including loans in foreclosure, was down 0.6 percent from April 2016’s 2.6 percent.

“Most major indicators of mortgage performance improved in April, showing that the market continues to benefit from improved economic growth and home price increases,” said Dr. Frank Nothaft, Chief Economist for CoreLogic. “Regionally, with the exception of several energy industry intensive states – Alaska and North Dakota – the rest of the U.S. continues to see improvements in mortgage performance. While overall performance is improving, it reflects the older legacy pipeline of loans that continue to heal, especially in judicial states which typically take longer to clear out.”

According to CoreLogic, measuring early-stage delinquency rates gives a good outlook at the health of the overall mortgage market. They monitor all stages of delinquency along with transition rates from one stage of delinquency to the next, particularly because early-stage delinquencies can be volatile. From Current to 30-days past due, 1.2 percent of mortgages transitioned in April 2017. This is 0.2 percent above April 2016. Just before the financial crisis in January 2007, the rate was 1.2 percent and peaked in November at 2 percent.

Mortgages 30-59 days past due, or early-stage delinquencies, increased 2.2 percent in April from last years 2 percent. Sixty to 90 days past due were at 0.63 percent, which is a minuscule 0.1 percent decline from April 2016.

“Delinquency rates are down virtually across the board as the rebound in the U.S. housing market continues to gather steam,” said Frank Martell, President and CEO of CoreLogic. “It appears likely that delinquency rates will continue to fall for some time, but at a moderating pace. As we look forward, improved fundamentals provide us with a firm foundation and we must now increase our attention to carefully expand the supply of affordable housing stock and ensure that mortgage lending policies help to prudently promote first-time homeownership.”