The property information provider CoreLogic released its monthly Loan Performance Insights [1] report for July 2020, which revealed that, on a national level, 6.6% of mortgages were in a stage of delinquency (30 days or more past due, which takes into account those in foreclosure). This represents a 2.8-percentage point increase in the overall delinquency rate compared to this time last year, when it was 3.8%.
"To gain an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency [1]," the company reports, "including the share that transitions from current to 30 days past due."
In July, the U.S. delinquency and transition rates, and their year-over-year changes, were as follows, according to CoreLogic:
- Early-Stage Delinquencies (30 to 59 days past due): 1.5%, down from 1.8% in July 2019, and down from 4.2% in April when early-stage delinquencies spiked.
- Adverse Delinquency (60 to 89 days past due): 1%, up from 0.6% in July 2019, but down from 2.8% in May.
- Serious Delinquency (90 days or more past due, including loans in foreclosure): 4.1%, up from 1.3% in July 2019. This is the highest serious delinquency rate since April 2014.
- Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, down from 0.4% in July 2019. The July 2020 foreclosure rate is the lowest for any month in at least 21 years.
- Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 0.8%, unchanged from July 2019. The transition rate has slowed since April 2020, when it peaked at 3.4%.
Home values, according to the CoreLogic Price Index, are rising, yet, the report said, "unemployment levels in hard-hit areas remain stubbornly high, leaving some borrowers house-rich but cash poor. Despite the slow reopening of several sectors of the economy, recovery for other industries like entertainment, tourism, oil and gas have a more uncertain outlook for the remainder of 2020. With persistent job market and income instability, Americans continue to tap into savings to stay current on their home loans. But as savings run out, borrowers could be pushed further down the delinquency funnel."
Millennials, are among the many Americans taking advantage of low rates to either purchase their first home or upgrade their living situations,” said Frank Martell, president and CEO of CoreLogic. “However, given the unsteadiness of the job market, many homeowners are beginning to feel the compounding pressures of unstable income and debt on personal savings buffers, creating heightened risk of falling behind on their mortgages."
Added Dr. Frank Nothaft, Chief Economist at CoreLogic, “Four months into the pandemic, the 120-day delinquency rate for July spiked to 1.4%. This was the highest rate in more than 21 years and double the December 2009 Great Recession peak. The spike in delinquency was all the more stunning given the generational low of 0.1% in March.”
While all U.S. states in July logged an increase in overall as well as serious delinquencies, pandemic hotspots Nevada, New Jersey, Hawaii, New York, and Florida were impacted the most, according to CoreLogic.
By the same token, every U.S. metro area recorded at least a small increase in serious delinquency rates in July. Odessa, Texas—which has been hard hit by job loss in the oil and gas industry—experienced the largest annual increase. Laredo, Texas; Miami; McAllen, Texas; and Kahului, Hawaii all experienced a large increase in serious delinquency.
Authors of CoreLogic's report stated that "with industries like oil and gas projected to leave millions of jobs unrestored throughout the remainder of the year, we may expect to see continued increases in mortgage delinquencies."
For the full report, including regional data, graphics, and methodology, visit CoreLogic's website.