CoreLogic’s monthly Loan Performance Insights Report for September 2022 shows that 2.8% of all mortgages in the U.S. (approximately 1.4 million loans) were in some stage of delinquency (30 days or more past due, including those in foreclosure), representing a 1.1 percentage point decrease compared to 3.9% in September 2021.
In September 2022, the U.S. delinquency and transition rates, and their year-over-year changes, were 1.2% for early-stage delinquencies (30 to 59 days past due), up from 1.1% in September 2021 while adverse delinquencies (60 to 89 days past due) were 0.4%, up 0.3%. Serious delinquencies (90 days or more past due, including loans in foreclosure) were 1.2%, down from 2.4% in September 2021 and a high of 4.3% in August 2020.
The foreclosure inventory rate (the share of mortgages in some stage of the foreclosure process) was 0.3%, up from 0.2%. The transition rate (the share of mortgages that transitioned from current to 30 days past due) was 0.6%, unchanged from September 2021.
Overall U.S. mortgage delinquencies again hovered near record lows in September, with every state and all but one metro in Illinois posting at least slight annual declines. However, with a potential recession and projected increase in the national unemployment rate looming, some uptick in delinquency rates could be expected in 2023. That said, 99% of homeowners with a mortgage have locked in rates below 6%. As a result, even if delinquency activity posts a minor increase, it is unlikely to cause the type of housing downturn seen during the Great Recession, when questionable underwriting practices allowed buyers to take out mortgages that exceeded their budgets.
“All stages of delinquency remained low in September,” says Molly Boesel, principal economist at CoreLogic. “Early-stage, overall and serious delinquencies were either at or below their pre-pandemic rates. Low unemployment, which has also returned to the level seen before the COVID-19 outbreak, is contributing to strong mortgage performance. However, if the U.S. enters a recession, increases in delinquency rates can be expected.”
In September, all states posted annual declines in overall delinquency rates. The states with the largest declines were Louisiana (down 2.9 percentage points); as well as Hawaii, Nevada and New Jersey (all 1.8 percentage points). The remaining states, including the District of Columbia, registered annual delinquency rate drops between 1.7 percentage points and 0.3 percentage points.
All but one U.S. metro area posted at least a small annual decrease in overall delinquency rates, with only the Decatur, Illinois metro registering a 0.2 percentage point gain since September 2021.
All U.S. metro areas posted at least a small annual decrease in serious delinquency rates, with three Texas areas posting the largest decreases: Odessa (down 4.1 percentage points), Laredo (down 3.2 percentage points) and Midland (down 2.9 percentage points).