Delinquencies down in May, but broader data sends mixed signals
The mortgage delinquency rate sits at its lowest point in over 20 years after descending annually for 17 straight months through May, according to CoreLogic. But a broader look at this year's figures could signal a shift in the narrative.
CoreLogic reported 3.6% of mortgages were in some stage of delinquency in May, marking a 0.6 percentage point decline from a year ago. At the same time, the Mortgage Bankers Association released its National Delinquency Survey in the second quarter of the year, which showed delinquencies on the rise.
The overall delinquency rate for mortgages in the second quarter was 4.53%, an increase of 17 basis points annually and 11 basis points from the start of the year, according to the MBA.
"The unemployment rate remains quite low, but the national mortgage delinquency rate in the second quarter rose from both the first quarter and one year ago. The economy is slowing, and this poses the risk of further increases in delinquency rates. Across loan types, the FHA delinquency rate posted the largest variance, increasing 29 basis points from last quarter and 52 basis points from a year ago," Marina Walsh, the MBA's vice president of industry analysis, said in a press release.
"Heavy rains and flooding, extreme heat, and tornadoes in certain states during the spring, may have also contributed to the increase in the delinquency rate, as some borrowers likely faced disruption or hardship," Walsh added.
While up in the second half of the year, delinquencies managed to stay relatively low. CoreLogic credits the May declines to healthy wages and property values, but similar to the MBA, noted natural disasters pushed up levels on local scales.
"Growth in family income and home prices continues to support low delinquency rates," Frank Nothaft, chief economist at CoreLogic, said in a press release. "Communities that experienced a rise in delinquencies are generally those that also suffered from natural disasters. Last year's hurricanes and wildfires, and this spring's severe flooding from heavy rainstorms and snowmelt have pushed delinquency rates higher in these impacted communities."