Mortgage Delinquencies Decline for 16 Consecutive Months

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CoreLogic’s Loan Performance Insights Report for July 2022 shows that 3% of all mortgages in the U.S. were in some stage of delinquency (30 days or more past due, including those in foreclosure), representing a 1.2 percentage point decrease compared to 4.2% in July 2021.

In July, the U.S. delinquency and transition rates, and their year-over-year changes, were 1.3% for early-stage delinquencies (30 to 59 days past due), up from 1.1% in July 2021; 0.4% for adverse delinquency (60 to 89 days past due), up from 0.3% in July 2021; 1.3% for serious delinquency (90 days or more past due, including loans in foreclosure), down from 2.8% in July 2021 and a high of 4.3% in August 2020; 0.3% for the foreclosure inventory rate (the share of mortgages in some stage of the foreclosure process), up from 0.2% in July 2021; and 0.7% for transition rate (the share of mortgages that transitioned from current to 30 days past due), up from 0.6% in July 2021.

Although overall U.S. mortgage delinquencies crept up again in July from earlier in 2022, they declined for the 16th straight month year over year and remained near historic lows. The national foreclosure rate has held steady at 0.3% since March but rose by 0.1 percentage point from July 2021. This slight bump mirrors metro-level trends, with almost two-thirds of areas that CoreLogic tracks posting small annual foreclosure gains. The minor uptick in foreclosures may be due to mortgage forbearance periods and moratoriums ending for some homeowners, while the increase in delinquencies could indicate that inflation is negatively impacting others’ abilities to make monthly payments.

“Early-stage delinquencies are showing a small but clear increasing trend on a month-over-month and year-over-year basis,” comments Molly Boesel, principal economist at CoreLogic. “While the share of mortgages that are 30 to 89 days past due remains below the pre-pandemic level, the slight increase is occurring in most areas of the country and could indicate that more borrowers are having trouble making their monthly payments.”

In July, all states posted annual declines in their overall delinquency rates. The states with the largest declines were Hawaii and Nevada (both down 2.3 percentage points), New Jersey (down 2.1 percentage points) and New York (down 2.0 percentage points), the third consecutive month that these states have led the country for delinquency declines. The remaining states, including the District of Columbia, registered annual delinquency rate drops between 1.9 percentage points and 0.2 percentage points.

All but eight U.S. metro areas posted at least a small annual decrease in overall delinquency rates, with increases in those metros ranging from 0.1 percentage points to 0.4 percentage points.

All U.S. metro areas posted at least a small annual decrease in serious delinquency rates, with the largest decreases posted for Odessa, Texas (down 4.7 percentage points); Laredo, Texas (down 3.7 percentage points); and Kahului-Wailuku-Lahaina, Hawaii (down 3.6 percentage points).

Image: Matthew LeJune on Unsplash

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