According to CoreLogic’s latest Loan Performance Insights Report, 4.5% of U.S. mortgages were in some stage of delinquency in May 2017, representing a 0.8 percentage-point decline in the overall delinquency rate compared with May 2016, when it was 5.3%.
Notably, the serious delinquency rate (90 days or more past due, including loans in foreclosure) was just 2% percent, which was unchanged from April 2017 and down from 2.6% in May 2016.
April’s and May’s serious delinquency rate was the lowest since November 2007, when it was also 2%, according to CoreLogic.
As of May 2017, the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.7%, compared with 1% in May 2016.
The rate for early-stage delinquencies, defined as 30-59 days past due, was 1.9% in May 2017, down from 2% in May 2016. The share of mortgages that were 60-89 days past due in May 2017 was 0.63%, down slightly from 0.66% in May 2016.
“Strong employment growth and home price increases have contributed to improved mortgage performance,” says Dr. Frank Nothaft, chief economist for CoreLogic. “Early-stage delinquencies are hovering around 17-year lows, and the current-to-30-day past due transition rate remained low at 0.8 percent. However, the same positive economic conditions helping performance have also contributed to a lack of affordable supply, creating challenges for homebuyers.”
The share of mortgages that transitioned from current to 30 days past due was 0.8% in May 2017 compared with 0.9% 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%, and it peaked in November 2008 at 2%.
“A prolonged period of relatively tight underwriting criteria has driven delinquencies down to pre-crisis levels across many parts of the country,” says Frank Martell, president and CEO of CoreLogic. “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.”