Mortgage default rates close to pre-pandemic levels in the United States

CoreLogic’s latest monthly Loan Performance Analysis Report shows that 4.2% of all mortgages in the United States in July 2021 were at some stage of delinquency (30 days or more past due, including those in foreclosure), which is a decrease from 2.3 percentage points of delinquency compared to July 2020, when it was 6.5%. While overall delinquency remains above the pre-pandemic rate of February 2020 of 3.6%, it is the lowest rate since last March.

To get an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency. As of July 2021, the delinquency and transition rates in the United States, as well as their year-to-year variations, were as follows:

  • Early delinquency (30 to 59 days late): 1.1%, compared to 1.5% in July 2020.
  • Unwanted delinquency (60 to 89 days late): 0.3%, compared to 1% in July 2020.
  • Serious delinquency (90 days or more past due, including foreclosed loans): 2.8%, up from 4.1% in July 2020. Although still high, this is the highest rate of serious delinquency. low since May 2020.
  • Foreclosure inventory rate (the share of mortgages at a certain stage of the foreclosure process): 0.2%, up from 0.3% in July 2020. This is the lowest foreclosure rate recorded since CoreLogic began to log data (1999).
  • Transition rate (the share of mortgages that went from current maturities to 30 days): 0.6%, down from 0.8% in July 2020.

As we continue to see serious delinquency improve, approximately one million people across the country have been unable to make payments for at least six months. In fact, the share of borrowers in arrears for six months or more accounted for about half of total defaults in July, with many still relying on options such as forbearance, loan modifications and other government provisions to avoid foreclosure.

“The decline in delinquency levels is an encouraging sign of economic improvement and the sustainability of the housing market,” said Frank Martell, President and CEO of CoreLogic. “In anticipation of the end of many forbearance and assistance programs, many supported borrowers must consider their financial options, including a potential loan modification, to ensure they stay up to date. and avoid foreclosures. “

“Even though loan modification or income collection may not help delinquent homeowners become and stay up to date with their payments, the double-digit rise in home prices can help them avoid a troubled sale,” said Dr Frank Nothaft, chief economist at CoreLogic. “Homeowners with significant equity are much less likely to experience a foreclosure sale, and luckily, the CoreLogic Home Equity Report found that the average homeowner had earned $ 51,500 in equity over the course of of the last year, that is, a five-fold increase per year. “

State and metro to take away:

  • In July, all of the U.S. states saw a decline in overall annual delinquency rates, New Jersey (down 3.9 percentage points), Florida (down 3.5 percentage points) and Nevada ( down 3.3 percentage points) at the top with the largest declines.
  • All US subways also posted annual declines in overall delinquency rates in July, Miami (down 5.4 percentage points), Laredo, Texas (down 5.1 percentage points) and Kingston, New York (down 5.1 percentage points). of 5 percentage points) recording the most significant declines.
  • Nevertheless, high overall delinquency rates persist in some metropolitan areas, notably Odessa, Texas (11%); Pine Bluff, Arkansas (10.6%) and Laredo, Texas (10.5%).

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