Mortgage delinquency rates in US to be lowest
According to CoreLogic’s Loan Performance Insights Report, nationally, 5 percent of U.S. mortgages were in some stage of delinquency (30 days or more past due including those in foreclosure) in September 2017. This represents a 0.2 percentage point year-over-year decline in the overall delinquency rate compared with September 2016 when it was 5.2 percent.
As of September 2017, the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.6 percent, down from 0.8 percent in September 2016. Both August and September of this year experienced the lowest foreclosure inventory rate since June 2007 when it was also 0.6 percent, and the September foreclosure inventory rate was the lowest for the month of September in 11 years when it was 0.5 percent in September 2006.
- Overall Mortgage Delinquency Rate Fell 0.2 Percentage Points Year Over Year
- Foreclosure Rate Declined 0.2 Percentage Points Year Over Year
- Early-Stage Delinquencies Rose 0.3 Percentage Points Year Over Year
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 30-59 days past due, was 2.4 percent in September 2017, up 0.3 percentage points from 2.1 percent in September 2016. The share of mortgages that were 60-89 days past due in September 2017 was 0.7 percent, unchanged from September 2016. The serious delinquency rate, those that are 90 days or more past due, declined 0.4 percentage points year over year from 2.3 percent in September 2016 to 1.9 percent in September 2017. The 1.9 percent serious delinquency rate in June, July, August and September of this year marks the lowest level for any month since October 2007 when it was also 1.9 percent, and is also the lowest for the month of September since 2007 when the serious delinquency rate was 1.8 percent.
“September’s early-stage delinquency rate increased by 0.3 percent from a year ago, the largest increase since June 2009. This does not reflect a deterioration in credit, but rather the impact of the hurricanes in Texas, Florida and Puerto Rico,” said Dr. Frank Nothaft, chief economist for CoreLogic. “September’s early-stage delinquency transition rate rose to 2.6 percent in Texas and it rose to 3.2 percent in Florida, which is higher than the 1 percent that’s typical for both states. Texas and Florida’s early-stage delinquency transition rates in September are much lower than New Orleans in September 2005 when the transition rate reached 17.4 percent as a result of Hurricane Katrina.”
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 1.3 percent in September 2017, up from 0.9 percent in September 2016. The September rate was the highest for any month in nearly three years, since November 2014 when it was 1.4 percent. 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.
“While natural hazard risk was elevated in 2017, the economic fundamentals that drive mortgage credit performance are the best in two decades,” said Frank Martell, president and CEO of CoreLogic. “The combination of strong job growth, low unemployment rates, steady economic performance and prudent underwriting has led to continued improvement in mortgage performance heading into next year.”