Clouds on the Horizon for Many U.S. Homeowners: Overall Delinquency Rates Beginning to Climb
- Early-stage and adverse delinquency rates increased for the second consecutive month – high correlation to geographies most impacted by COVID-19
- All 50 states logged year-over-year increases in overall delinquencies this May
- Over 75% of U.S. metro areas experienced an increase in serious delinquency rates
CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released its monthly Loan Performance Insights Report for May 2020. On a national level, 7.3% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure). This represents a 3.7-percentage point increase in the overall delinquency rate compared to 3.6% in May 2019.
To gain an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency, including the share that transition from current to 30 days past due. In May 2020, the U.S. delinquency and transition rates, and their year-over-year changes, were as follows:
- Early-Stage Delinquencies (30 to 59 days past due): 3%, up from 1.7% in May 2019.
- Adverse Delinquency (60 to 89 days past due): 2.8%, up from 0.6% in May 2019.
- Serious Delinquency (90 days or more past due, including loans in foreclosure): 1.5%, up from 1.3% in May 2019. This is the first year-over-year increase in the serious delinquency rate since November 2010.
- Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, down from 0.4% in May 2019. This is the second consecutive month the U.S. foreclosure rate was at its lowest level for any month since at least January 1999.
- Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 2.2%, up from 0.8% in May 2019. By comparison, in January 2007 — just before the start of the financial crisis — the current- to 30-day transition rate was 1.2%, while it peaked in November 2008 at 2%.
In the months leading up to the pandemic, U.S. mortgage performance was showing signs of sustained improvement. The national unemployment rate matched a 50-year low in February, and overall delinquency had been on an impressive 27 consecutive-month decline. However, by May 2020 — just two months after the coronavirus (COVID-19) was declared a global pandemic — U.S. unemployment surged past 13%, leaving over 4 million homeowners (accounting for more than 8% of all mortgages) little choice but to enter a COVID-19 mortgage forbearance program.
“The national unemployment rate soared from a 50-year low in February 2020, to an 80-year high in April,” said Dr. Frank Nothaft, chief economist at CoreLogic. “With the sudden loss of income, many homeowners are struggling to stay on top of their mortgage loans, resulting in a jump in non-payment.”
Absent further government programs and support, CoreLogic forecasts the U.S. serious delinquency rate to quadruple by the end of 2021, pushing 3 million homeowners into serious delinquency...
