Delinquency Rates Falling—But Signs of Reversal Ahead

August 2, 2022
Delinquency Rates Falling
Inflation and other economic pressures beginning to make an adverse impact on some homeowners with mortgages.

April marked one year and one month of delinquencies dropping on a yearly basis, with delinquent mortgages sliding 1.8% annually to 2.9% of all loans, according to CoreLogic’s latest Loan Performance Insights report. On a monthly basis, April’s delinquency rate is up slightly from March’s 2.7% share. The strong job market and healthy income growth drove down the number of late payments at the start of this year and late last year, pushing March’s delinquency rate to the lowest level since at least January 1999. Inflation and other economic pressures, however, appear to be beginning to make an adverse impact on some homeowners with mortgages, though delinquencies still remain near all-time lows. Notably, while overall delinquencies are down year over year, early-stage delinquencies are up, with 1.2% of home loans 30 to 59 days past due in April, compared to 1.0% in the same month last year. Meanwhile, the foreclosure rate, while flat monthly and annually at 0.3%, rose slightly from late 2021. CoreLogic attributed the small swing to lenders ending forbearance periods for extremely delinquent borrowers, reflecting little on the state of the “relatively solid” housing market. “The U.S. foreclosure rate edged up in spring 2022 after hitting a historic low at the end of 2021,” said Molly Boesel, CoreLogic’s principal economist. “Moratoria and forbearance that helped keep homeowners out of foreclosure are expiring for many borrowers, but ongoing strong employment numbers and large amounts of equity should keep foreclosure rates low moving forward.”

Source: Scotsman Guide