The Emerging Paradox: Mortgage Delinquencies on the Rise, Along with Home Sales


There is an emerging paradox in the U.S. housing market: home sales are rising and demand has never been stronger – yet mortgage delinquencies are on the rise.

The U.S. mortgage delinquency rate (loans 30 days or more past due but not in foreclosure) increased 2.8% in July compared with July 2019, according to CoreLogic’s Loan Performance Insights Report.

Roughly 6.6% of mortgages were in some stage of delinquency, up significantly from 3.8% in July 2019, CoreLogic says.

“Many Americans, particularly millennials, are taking advantage of low rates to either purchase their first home or upgrade their living situations,” says Frank Martell, president and CEO of CoreLogic, in the report. “However, given the unsteadiness of the job market, many homeowners are beginning to feel the compounding pressures of unstable income and debt on personal savings buffers, creating heightened risk of falling behind on their mortgages.”

Early-stage delinquencies (30 to 59 days past due) represented 1.5% of all loans, down from 1.8% in July 2019 and down from 4.2% in April when early-stage delinquencies spiked.

Mortgages that were 60 to 89 days past due represented 1% of all loans, up from 0.6% in July 2019, but down from 2.8% in May.

Serious delinquencies (90 days or more past due, including loans in foreclosure) represented 4.1% of all loans, up significantly from 1.3% in July 2019.

July saw the highest serious delinquency rate since April 2014.

As of the end of the month, the foreclosure inventory rate stood at 0.3%, down from 0.4% in July 2019.

The foreclosure rate for July was the lowest for any month in at least 21 years.

CoreLogic’s data shows that many of the borrowers hard-hit by the pandemic – particularly in terms of job loss – have now become “house-rich but cash poor.”

“Despite the slow reopening of several sectors of the economy, recovery for other industries like entertainment, tourism, oil and gas have a more uncertain outlook for the remainder of 2020,” the report states. “With persistent job market and income instability, Americans continue to tap into savings to stay current on their home loans. But as savings run out, borrowers could be pushed further down the delinquency funnel.”

States that saw the largest year-over-year increases in overall delinquency rates included Nevada (up 5.2 percentage points), New Jersey (up 4.8 percentage points), Hawaii (up 4.7 percentage points), New York (up 4.6 percentage points) and Florida (up 4.4 percentage points).

Similarly, all U.S. metro areas logged at least a small increase in serious delinquency rates in July.

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