Florence may rip apart declining delinquencies in the Carolinas
The serious mortgage delinquency rate sank to its lowest June reading in 11 years, though recent natural disasters pose risk to loan performance in affected areas, according to CoreLogic's Loan Performance Insights Report.
The serious delinquency rate, measuring mortgages 90 or more days past due (including loans in foreclosure), ticked down to 1.7% in June from 1.9% a year ago. This marks a June low not seen since 2007 when it was 1.6%, and the lowest for any month since August 2007 when it was also 1.7%, according to CoreLogic data.
Florida and Texas, which were hit by Hurricanes Irma and Harvey last year, were the only states to post annual gains in the serious delinquency rate in June. This news comes on the heels of Hurricane Florence, the strongest storm to target the Carolinas in decades, according to the Federal Emergency Management Agency.
"Neighborhoods impacted by similar disasters in 2018 should also expect to see a spike in delinquencies in the coming year. With storms and wildfires currently impacting multiple areas of the country, homeowners, lenders and servicers should remain vigilant of potential impacts, particularly those in California, Hawaii and the Rocky Mountain and Gulf Coast states,” Frank Martell, president and CEO of CoreLogic, said in a press release.
The rate for early-stage delinquencies, referring to loans 30-59 days past due, held steady at 2% year-over-year in June, but ticked up from 1.8% month-over-month. The share of mortgages that were 60-89 days past due also remained unchanged from a year ago at 0.6%.
An improved economy helped support steadying and declining defaults.
"A solid labor market enables more homeowners to remain current on their mortgage. The national unemployment rate in June 2018 was 4%, the lowest for June in 18 years," said Frank Nothaft, chief economist for CoreLogic.
"While this has helped reduce delinquencies nationally, delinquency rates in areas hit by wildfires, hurricanes or other natural disasters have jumped as families deal with financial disruption and tragedy. The loss of housing and displacement of families also tends to drive up local rents and reduce vacancies," he added.