Delinquency rates drop for the 19th month in a row

The share of distressed mortgages in the U.S. decreased in October, falling for a 19th straight month, even as early-stage delinquencies saw a small uptick, according to CoreLogic.

The nationwide delinquency rate, which includes all mortgages 30 days or more past due or in the foreclosure process, fell to 2.8% in October from 3.8% one year earlier. The share was unchanged on a month-to-month basis, and the percentage is currently near its lowest point in more than 20 years, the real estate data and analytics provider said. 

The U.S. foreclosure rate also remained near its record low of 0.3%, the same level it has stood at for the last eight months. But October's share was up from 0.2% the previous October.

The ongoing decline in distressed accounts is partly attributable to the high number of borrowers becoming current after exiting COVID forbearance relief programs, which began to expire in the summer of 2021. Large amounts of home equity accrued over the past two years also allowed some borrowers to sell their properties before reaching the late stages of delinquency. 

Although not unexpected, data surrounding a small but growing subset who have missed an initial payment raised some concern. 

"The share of loans in early-stage delinquency increased slightly in October, led by Florida, which began to see the effects of Hurricane Ian," said Molly Boesel, principal economist at CoreLogic, in a press release. 

Nationwide, mortgages marked as 30-to-59 days late in October increased to 1.3% from 1.2% one year prior, while loans delinquent between 60 and 90 days also saw a 1 basis point uptick to 0.4% from 0.3%. 

"The Punta Gorda and Cape Coral metro areas on Florida's Gulf Coast saw early-stage mortgage delinquencies triple. If past storm impacts are an accurate barometer, delinquencies in these metros should decrease between the next six to 12 months," Boesel said.

But at the same time, some researchers recently said a rising number of defaults among Federal Housing Administration-backed loans should be monitored in the near future.        

Serious delinquencies in October, defined as loans 90 days or more past due including accounts in foreclosure, dropped a full percentage point to a 1.2% share from 2.2% compared to a year earlier, CoreLogic said.

The overall delinquency rate also dropped on an annual basis across all 50 states and the District of Columbia. Louisiana posted the largest decrease of 2.8%, followed by New York and New Jersey, where the share dropped by 1.6% each from October 2021 when all three states were in the midst of recovery from Hurricane Ida. The remaining 47 states and the District of Columbia all saw delinquencies fall by at least 0.2%.

Punta Gorda and Cape Coral were among six U.S. metropolitan areas recording an annual increase in the delinquency rate, leading the country at 1.9% and 1.8%, respectively. The other four markets were all located in the Midwest. Shares rose in Iowa City, Iowa by 0.4%, while in Cedar Rapids, Iowa, and Lima, Ohio, delinquencies came in higher by 0.2%. Decatur, Illinois, saw its rate rise 0.1%.