The U.S. mortgage delinquency rate remained near its historical low in March, rising just 1% compared with February but falling 0.4% compared with March 2019, according to CoreLogic’s Loan Performance Insights Report.
Only 3.6% of mortgages were in some stage of delinquency.
The delinquency rate is expected to increase more substantially in April and May; most borrowers were able to make their March payments prior to the pandemic kicking into high gear.
“The COVID-19 pandemic has shocked our economic system and led to unprecedented job loss, reducing the ability of affected families to make their monthly mortgage payments,” says Frank Nothaft, chief economist at CoreLogic. “The latest forecast from the CoreLogic Home Price Index shows prices declining in 41 states through April 2021, potentially erasing home equity and increasing foreclosure risk.”
In the months leading up to the COVID-19 crisis, U.S. mortgage performance was showing sustained improvement. In March – one month after the U.S. annual unemployment rate hit a 50-year low – the nation’s overall delinquency rate continued to decline year over year, following a trend that began in January 2018.
However, the job market began its downward spiral in March, as shelter-in-place orders went into effect, thus increasing the likelihood of borrowers falling behind on their mortgage payments.
“The first three months of 2020 reflected one of the strongest quarters for U.S. mortgage performance in recent history,” says Frank Martell, president and CEO of CoreLogic. “The build-up in home equity over the past several years, government stimulus programs, and lower borrowing costs have helped cushion homeowners from the initial financial shock of the pandemic and kept widespread delinquencies at bay during the first months of the recession.
“Looking ahead, we can expect a more widespread impact on U.S. delinquency rates as the economic toll of elevated unemployment and shelter-in-place orders becomes more evident.”