Mortgage Delinquency Rate Lowest in Nearly a Decade
Economic ‘tailwinds’ are contributing to healthy mortgage performance, reported CoreLogic, Irvine, Calif., as the delinquency rate fell to its lowest point in nearly a decade.
“Strong employment growth and home price increases have contributed to improved mortgage performance,” said CoreLogic Chief Economist Frank Nothaft. “Early-stage delinquencies are hovering around 17-year lows, and the current-to-30-day past-due transition rate remained low.”
But Nothaft noted the same positive economic conditions helping performance also contributed to a lack of affordable supply, “creating challenges for homebuyers,” he said.
CoreLogic’s monthly Loan Performance Insights report showed that 4.5 percent of mortgages nationally were in some stage of delinquency (30 days or more past due including those in foreclosure) in May. This represents a 0.8 percentage point decline in the overall delinquency rate compared with May 2016 when it equaled 5.3 percent.
As of May, the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.7 percent, down from 1 percent a year before. The serious delinquency rate, loans 90 days or more past due or in foreclosure, was 2 percent, unchanged from April and down from 2.6 percent in May 2016. The 2 percent serious delinquency rate in April and May this year was the lowest since November 2007 when it also equaled 2 percent.
The rate for early-stage delinquencies, defined as 30-59 days past due, was 1.9 percent in May, down from 2 percent in May 2016. Because early-stage delinquencies can be volatile, CoreLogic also analyzes transition rates. The share of mortgages that transitioned from current to 30 days past due was 0.8 percent in May compared with 0.9 percent in May 2016, a 0.1 percentage point decrease year over year. By comparison, in January 2007–just before the start of the financial crisis–the current-to-30-day transition rate was 1.2 percent and it peaked in November 2008 at 2 percent.
“A prolonged period of relatively tight underwriting criteria has driven delinquencies down to pre-crisis levels across many parts of the country,” said CoreLogic President and CEO Frank Martell. “As pressure to relax underwriting standards increases, the industry needs to proceed carefully and take progressive, sensible actions that protect hard-fought improvements in mortgage performance.”