Yet Five States Post Annual Gains
Based on CoreLogic’s newly released monthly Loan Performance Insights Report, 3.7% of all U.S. mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in August 2019, representing a 0.2 percentage point decline in the overall delinquency rate compared with August 2018, when it was 3.9%.
As of August 2019, the foreclosure inventory rate – which measures the share of mortgages in some stage of the foreclosure process – was 0.4%, down 0.1 percentage points from August 2018. The August 2019 foreclosure inventory rate tied the prior nine months as the lowest for any month since at least January 1999.
Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market. To monitor mortgage performance comprehensively, CoreLogic examines all stages of delinquency, as well as transition rates, which indicate the percentage of mortgages moving from one stage of delinquency to the next.
The rate for early-stage delinquencies – defined as 30 to 59 days past due – was 1.8% in August 2019, unchanged from August 2018. The share of mortgages 60 to 89 days past due in August 2019 was 0.6%, unchanged from August 2018. The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.3% in August 2019, down from 1.5% in August 2018. This August’s serious delinquency rate of 1.3% was the lowest for the month of August since 2005 when it was also 1.3%. The serious delinquency rate has remained consistent since April 2019.
Since 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% in August 2019, unchanged from August 2018. By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2%, while it peaked at 2% in November 2008.
“Job loss can trigger a loan delinquency, especially for families with limited savings,” said Dr. Frank Nothaft, chief economist at CoreLogic. “The rise in overall delinquency in Iowa, Minnesota, Nebraska and Wisconsin coincided with a rise in state unemployment rates between August 2018 and August 2019.”
The nation’s overall delinquency remains near the lowest level since at least 1999. However, five states posted small annual increases in overall delinquency rates in August: Iowa (0.2 percentage points), Minnesota (0.1 percentage points), Nebraska (0.1 percentage points), Wisconsin (0.1 percentage points) and Rhode Island (0.1 percentage points).
In August 2019, 47 metropolitan areas recorded small annual increases in overall delinquency rates. Some of the highest gains were in the Midwest and Southeast. Metros with the largest increases were Dubuque, Iowa (2.2 percentage points), Pine Bluff, Arkansas (1.1 percentage points), Goldsboro, North Carolina (0.6 percentage points) and Panama City, Florida (0.5 percentage points).
While the nation’s serious delinquency rate remains near a record low, 19 metropolitan areas recorded small annual increases in their serious delinquency rates. Metros with the largest increases were Panama City, Florida (0.9 percentage points), Jacksonville, North Carolina (0.2 percentage points), Wilmington, North Carolina (0.2 percentage points) and Goldsboro, North Carolina (0.2 percentage points). The remaining 15 metro areas logged annual increases of 0.1 percentage point.
“Delinquency rates are at 14-year lows, reflecting a decade of tight underwriting standards, the benefits of prolonged low interest rates and the improved balance sheets of many households across the country,” said Frank Martell, president and CEO of CoreLogic. “Despite this month’s near record-low serious delinquency rate, several metros in hurricane-ravaged areas of the Southeast have experienced higher delinquency rates of late. We expect to see these metros to return to pre-disaster delinquency rates over the next several months.”