Mortgage delinquencies continued to trend downward in July, falling to 4.1% of all mortgages, down from 4.7% in July 2017, according to CoreLogic’s Loan Performance Insights report.
That’s the lowest rate in 12 years.
However, it is possible that flood damage from hurricanes Florence and Michael will boost the overall mortgage delinquency rate in the months to come.
Early stage delinquencies – 30 to 59 days past due – represented 1.9% of all loans in July, down from 2.1% in July 2017.
The share of mortgages that were 60 to 89 days past due was 0.6%, down from 0.7% in July 2017.
Serious delinquencies – defined as 90 days or more past due, including loans in foreclosure – represented 1.6% of all loans in July 2018, down from 1.9% a year earlier.
Thats the lowest serious delinquency rate for July since 2006, when it was 1.4%, and the lowest for any month since June 2007, when it was also 1.6%.
The foreclosure inventory rate stood at 0.5%, down 0.2 percentage points from 0.7% in July 2017 and the lowest for a July since 2006.
The foreclosure inventory rate was unchanged compared with April, May and June.
“With the national unemployment rate remaining below four percent since July, further declines in U.S. delinquency rates are likely in coming months,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “The exception will be in local areas impacted by natural hazards or a rise in unemployment. The destruction of homes and disruption to local commerce caused by natural disasters lead to a subsequent spike in local delinquency rates, even for homes that were untouched.”
Although no state posted a year-over-year increase in its 30-plus-day delinquency in July, several metropolitan areas in Florida and Texas recorded month-over-month increases.
This indicates properties in North Carolina, South Carolina and Virginia that recently experienced damage from Hurricane Florence may be at risk for early-stage delinquency.
CoreLogic identified thousands of homes in these three states that were impacted by wind and water damage from the storm.
“Despite an overall sunny picture of delinquencies, weather-driven hotspots dot the country,” says said Frank Martell, president and CEO of CoreLogic. “We expect higher delinquency rates in the mid-Atlantic region later this year due to Hurricane Florence, which impacted nearly half a million homes in North Carolina alone.
“We also see increases in serious delinquency rates in Florida and Texas reflecting the damage of Hurricanes Harvey and Irma,” he adds. ”In addition, Hawaii will likely experience an increase in delinquency rates as a result of Hurricane Lane and the eruption of Kilauea.”
CoreLogic conducted a risk analysis showing that Hurricane Michael could damage more than 57,000 homes in the Florida Gulf Coast.
These homes have a total reconstruction cost value (RCV) of approximately $13.4 billion, should they be completely destroyed by storm surge and wind damage.