How Are Mortgage Delinquency Rates Changing?

Mortgage delinquency levels continues to rise during October, according to the latest Loan Performance Insights Report published by CoreLogic.

During October, 6.1% of all mortgages were in some stage of delinquency, a 2.4% year-over-year increase. Much of this upward motion was attributed to the rate for serious delinquencies (90 days or more past due, including loans in foreclosure), which registered at 4.1%, up from 1.3% one year earlier. However, October’s rate was also slightly below September’s 4.2% level, which itself was a scant dip from the 4.3% rate in August.

Early-stage delinquencies in October (30 to 59 days past due) registered at a 1.4% rate, down from 1.8% one year earlier. The rate for adverse delinquencies (60 to 89 days past due) was 0.6%, unchanged from one year earlier.

The foreclosure inventory rate (the share of mortgages in some stage of the foreclosure process) was 0.3%, down from 0.4% in October 2019. This rate has been at 0.3% for seven consecutive months and is the lowest since at least January 1999. The transition rate (the share of mortgages that transitioned from current to 30 days past due) was 0.8%, inching up by a single percentage point from the previous year.

Every state experienced an annual increase in their overall delinquency rates, led by Hawaii (up 4.7%) and Nevada (4.6%). Among the major metro areas, Lake Charles, Louisiana, recorded the greatest increase with a 11 percentage point spike, due primarily to the lingering impacts of the damage from Hurricane Laura in August; other metro areas with elevated delinquency increases were Odessa, Texas (up 10.3 percentage points); Kahului, Hawaii (up 7.8 percentage points), and Midland, Texas (up 7.5 percentage points).

CoreLogic attributed the higher delinquency rates to pandemic-induced job losses and small businesses closures, although the company also observed that record levels of home equity plus the loan forbearance aspects of the CARES Act kept many borrowers out of foreclosure.

“During early autumn, the improving economy enabled more families to remain current on their home loan,” said Frank Nothaft, Chief Economist at CoreLogic. “In September and October, 0.8% of current borrowers transitioned into 30-day delinquency. This is the same as the monthly average for the 12 months prior to the pandemic, and well below the record peak of 3.4% of borrowers transitioning into delinquency that we observed in April 2020.”