Delinquencies shrink as housing market passes 'initial stress test'
While distressed mortgage rates crept down overall, serious delinquencies logged in September were triple the year-ago rate, according to CoreLogic.
The Loan Performance Insights Report showed the September delinquency rate decreased to 6.3% from 6.6% in August and jumped from 3.8% year-over-year.
Similarly, serious delinquencies — loans 90 days or more past due, including foreclosures — drifted downward to 4.2% from 4.3% the month prior, but dwarfed September 2019's 1.3%. Mortgages past 120 days due but not yet in foreclosure rose to 3.3% from 3.2% month-to-month and from 1% year-to-year.
The pandemic caused seriously delinquent loans to surge from 1.5% in May to 3.4% in June and could double up again by 2022 without additional government intervention for borrower relief.
"Although delinquencies remain high, it’s clear the economy has passed an initial stress test. High home equity balances and structural protections put in place as a result of the Great Recession contributed to surviving this test," Frank Martell, president and CEO of CoreLogic, said in the report. "Housing demand remains strong, and rates low, which provides optimism that the housing market will continue to be a bright spot in this COVID-ravaged economy."
The rate of 30- to 59-day early-stage delinquencies stayed mostly level, falling to 1.5% in September from 1.6% in August and 1.9% in September 2019. The rate for 60- to 89-day delinquencies dipped to 0.7% from 8.8% month-over-month, while rising from 0.6% year-over year.
The foreclosure rate held at 0.3% from August and edged down from 0.4% annually as foreclosure moratoria remain in effect.
At the state level, the highest foreclosure rates came in New York at 1.2%, Maine and Hawaii, both at 0.8%. A total of 14 states tied for the lowest rate at 0.1%.
Louisiana had the highest delinquency rate at 10.1%, followed 9.2% in Mississippi and 9% in New York. Idaho fell at the other end of the spectrum with the lowest delinquency rate of 3.4% with 3.6% in South Dakota and 3.7% in Wisconsin not far off.