Strong Jobs Market Forces Down Delinquencies and Foreclosures in 2022

According to CoreLogic’s monthly Loan Performance Insights Report covering December 2022, just 3% of all mortgages in the country were in some stage of delinquency. This represents a 0.4 percentage point decrease year-over-year and less than a 0.1 percentage point increase compared with November 2022. 

CoreLogic examined all stages of delinquency in December 2022; high-level findings included: 

• Early-Stage Delinquencies (30 to 59 days past due): 1.4%, up from 1.2% in December 2021. 
• Adverse Delinquency (60 to 89 days past due): 0.4%, up from 0.3% in December 2021. 
• Serious Delinquency (90 days or more past due, including loans in foreclosure): 1.2%, down from 1.9% in December 2021 and a high of 4.3% in August 2020. 
• Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, up from 0.2% in December 2021. 
• Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 0.8%, up from 0.6% in December 2021. 

The trend in 2022 was consistently low delinquency and foreclosure rates; December’s 3% overall delinquency rate and the 0.3% foreclosure rate were only slightly higher than numbers recorded over the previous six months. Both types of delinquencies bottomed out in early 2022 and are now showing signs of minor upticks. 

Most of the changes seen over the year were the result of early-stage delinquencies increasing beginning mid-2022. Still, even with that slight market adjustment, delinquencies remain at the lowest level since the data series began in 1999. 

However, December’s rate of serious delinquencies barely moved over previous month, and in fact, it barely moved over the whole year suggesting that while some borrowers may have missed several mortgage payments, most are likely to recover relatively quickly due to a strong jobs market. 

“Mortgage delinquency rates continued to post some of the strongest performance in three years in December, as a healthy job market helped borrowers remain current on their payments,” said Molly Boesel, Principal Economist at CoreLogic. “High amounts of home equity cushioned those borrowers who were far behind, keeping them from moving into foreclosure. While there was a small uptick in early-stage delinquencies and foreclosure inventory over 2022, other delinquency measures fell to new lows throughout the year.”

State and metro takeaways, as highlighted by CoreLogic, include: 

• In December, only one state posted an annual increase in its overall delinquency rate (Iowa, up by 0.1 percentage point). The states and districts with the largest declines were Louisiana (down by 1.1 percentage points); Washington, D.C. (down by 1 percentage point); and Alaska, Hawaii and New York (all down by 0.9 percentage points). The other states' annual delinquency rates dropped between 0.8 and 0 percentage points. 
• In December, 65 U.S. metro areas posted an increase in overall delinquency rates, representing 17% of locations that CoreLogic tracks. The top three areas for mortgage delinquency gains year over year were Cape Coral-Fort Myers, Florida (up by 2.9 percentage points), Punta Gorda, Florida (up by 2.8 percentage points) and Altoona, Pennsylvania (up by 1 percentage point). 
• All but four U.S. metro areas posted at least a small annual decrease in serious delinquency rates (defined as more than 90 days late on a mortgage payment). The metros that saw serious delinquencies increase were Cape Coral-Fort Myers, Florida (up by 1 percentage point), Punta Gorda, Florida (up by 0.9 percentage points) and Bloomsburg-Berwick, Pennsylvania and Williamsport, Pennsylvania (both up by 0.1 percentage points). Increases in Florida metros reflect damage caused by Hurricane Ian in September 2022.