Mortgage loan delinquencies have decreased since this time last year but remain above the pre-pandemic rate, according to the CoreLogic's Loan Performance Insights Report covering May.
The report showed 4.7% of all borrowers in some stage of delinquency, a 2.6-percentage point decrease compared to May 2020, when it was 7.3%. The researchers note that the early 2020 numbers, prior to the COVID-19 lockdowns, stood at 3.5%.
The analysts at CoreLogic say national initiatives supporting struggling homeowners have helped curb widespread crises due to past-due mortgage payments.
“The pandemic has created many challenges but, in the case of delinquencies, the impacts have been relatively muted thanks to numerous government support programs and the sharp snapback in economic activity over the past several quarters,” said Frank Martell, President and CEO of CoreLogic. “Looking forward, we expect a robust economy and near-zero interest rates to hold delinquency levels at reasonable levels."
The property data analytics company's Chief Economist Frank Nothaft adds that elevated home prices have given homeowners a "substantial equity cushion," which reduces the risk of foreclosure.
“The CoreLogic Home Price Index recorded an annual increase of 17% in June. This price rise builds home equity. For most borrowers in forbearance, the equity gain means they’ll still have some remaining—even if missed payments are added to their loan balance.”
Broken down by seriousness of delinquency, those 30-59 days past due stand at 1.2% of U.S. mortgages, which is down from 3% in May 2020. Understanding early-stage delinquency rates is important when it comes to analyzing the health of the mortgage market, the authors of the report note.
Adverse, 60-89 days late, delinquencies are at .3%, down from 2.8% a year prior.
Serious, 90+ days overdue, total 3.2% of all mortgage loans in the U.S., and that is compared to 1.5% in May 2020—while that is quite high, it marks the lowest percentage of serious delinquencies since the first COVID-related spike in June 2020, the researchers said.
The foreclosure inventory rate has not changed since May last year, due to federal foreclosure bans having been in place throughout the period. Even as federal and local foreclosure bans expire, the pros at CoreLogic do not expect a foreclosure crisis, due to the aforementioned levels of home equity, which has created "an additional financial buffer for those struggling to make mortgage payments."
On top of that, another CoreLogic study revealed that some 85% of mortgage holders maintained employment throughout the pandemic, a reminder that there were two significantly different tales told by Americans during the height of the coronavirus pandemic.
New Jersey, New York, and Florida saw the largest decreases in delinquency rates for the month. Elevated overall delinquency rates remain in some metros, including Texas, (Odessa; Laredo), Arkansas (Pine Bluff), and New Jersey (Vineland).