Delinquencies show cause for alarm despite 18 months of declines

The nationwide mortgage delinquency rate keeps descending lower, with June marking the 18th consecutive month of annual drops, according to CoreLogic. However, some red flags appeared on the radar.

CoreLogic's Loan Performance Insights Report showed 4% of mortgages were in some stage of delinquency in June, down from 4.3% the year before while rising from May's 3.6% rate. Even with the month-over-month increase, the rate of delinquencies remains near record lows.

"A strong economy and eight-plus years of home price growth have made mortgage foreclosure an infrequent event," Frank Nothaft, chief economist at CoreLogic, said in a press release. "This backdrop will help the mortgage market limit delinquencies in most of the country whenever a downturn should start."

However, warning signs arose with eight individual states that had annual increases in delinquencies.

"We saw rates jump in states such as Vermont, New Hampshire, Nebraska and Minnesota that weren't tied to a natural disaster," Marina Walsh, the MBA's vice president of industry analysis, said in a press release.

The increases without direct effects from hurricane or wildfire damage give possible warning that a future shift could be coming. For now, the foreclosure inventory rate remained at the 20-year low of 0.4%, inching below June 2018's 0.5%. The serious delinquency rate of loans 90 days or more past due including foreclosures also fell, going to 1.3% from 1.7%.

Vermont had the largest growth, going up by 0.7%, then New Hampshire at 0.3%, followed by Nebraska and Minnesota at 0.2%, and Connecticut, Iowa, Michigan and Wisconsin at 0.1% each.

Early-stage delinquencies, on the other hand, edged up annually to 2% from 2.1% while the share of mortgages 60-89 days past due stayed static at 0.6%.