Home price growth aids mortgage health, delinquency rate falls

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Strong loan performance continued into December as all delinquency stages fell annually behind equity gains and the sustained rise of home prices, according to CoreLogic's Loan Performance Insights Report.

The overall mortgage delinquency rate fell to 4.1% in December 2018 from 5.3% the year prior. Early-stage delinquencies edged down to 2% from 2.4% and the foreclosure inventory rate went to 0.4% from 0.6% year-over-year. It remained in line with November 2018, tying for the lowest monthly rate in no less than 18 years.

"Our latest home equity report found that the average homeowner saw a $9,700 increase in their equity during 2018," Frank Nothaft, chief economist for CoreLogic, said in a press release. "With additional 'skin in the game,' rising equity reduces the chances of a foreclosure, helping to push the foreclosure rate down to its lowest level since at least 2000."

The share of mortgages 60-89 days past due declined 0.1 percentage points to 0.7%. The serious delinquency rate — describing mortgages 90 or more days past due including foreclosures — dipped to 1.5% from 2.1% year-over-year. The serious delinquency rate held from August at the lowest it's been since March 2007.

While mortgage health improved nationally, natural disasters caused rises in delinquency rates in metro areas along the Southeast U.S.

A total of 12 statistical areas saw annual increases in serious delinquency rates. Panama City, Fla., had the highest increase of 1.2 percentage points. It was followed by Wilmington, N.C., with a 0.9 percentage point rise, and Albany, Ga., and Jacksonville, N.C., with 0.8 percentage point increases.

"On a national basis, income and home-price growth continue to support strong loan performance," said Frank Martell, president and CEO of CoreLogic. "Although things look good across most of the nation, areas that were impacted by hurricanes and other natural hazards are experiencing a sharp increase in the numbers of mortgages moving into 60-day delinquency or worse. One specific example is Panama City, which was devastated by Hurricane Michael, where 60-day delinquencies rose to 3.5% in December."

On a month-to-month basis, all delinquency rates remained static except for those 90 or more days past due. That grouping went to 1.5% from 1.1%.

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Foreclosures Mortgage defaults HELOCs Natural disasters Hurricane Michael CoreLogic