Mortgage Delinquency Rate Hits 20-year Low
Written By: Joel Palmer, Op-Ed Writer
Mortgage delinquency rates are at a 20-year low, according to an industry report..
The CoreLogic Loan Performance Insights Report found that 3.7 percent of U.S. residential mortgages were in some stage of delinquency in October 2019. That’s the lowest rate for that month in nearly 20 years.
The share of mortgages that transitioned from current to 30 days past due was 0.7 percent in October. By comparison, in January 2007, just before the start of the financial crisis, the rate was 1.2 percent. It peaked at 2 percent in November 2008.
“Despite recent stress in some areas of the country, mortgage delinquency rates continue to stay at near-record lows,” read a summary of the report.
The report noted that while most delinquencies on conventional mortgages were on older loans, most delinquencies on FHA and VA loans were on more recent loans.
About 60 percent of the seriously delinquent conventional loans were originated between 2003 and 2009 compared to 31 percent originated between 2010 and 2019. About 58 percent of the FHA loans and 76 percent of VA loans that were seriously delinquent were originated between 2010 and 2019.
According to CoreLogic, delinquency rates were much higher for loans originated between 2006 and 2008. Performance of all types of loans started to improve in 2009 as underwriting standards tightened and the economic recovery began.
Loans originated in 2015 and 2016 have performed the best, with the lowest 15-month delinquency rate in a decade. Delinquency rates were slightly higher for all loan types originated in 2018 compared to originated in 2017.
The overall rate of serious delinquencies, defined as those 90 days or more past due or in foreclosure, was 1.3 percent for October. That broke down to 3.3 percent for FHA loans, 1.8 percent for VA loans and 0.9 percent for conventional mortgages.
All but six states experienced year-over-year decreases in the rate of serious delinquencies, with the six states remaining unchanged.
Eight metropolitan areas in the Midwest and South recorded small annual increases in overall delinquency rates, with the highest increase of 1 point occurring in Pine Bluff, Arkansas. The other metros were Dubuque, Iowa; Rockford, Illinois; Columbus, Indiana; Kokomo, Indiana; Manhattan, Kansas; Oshkosh-Neenah, Wisconsin and La Crosse-Onalaska, Wisconsin-Minnesota.
There were also 14 metropolitan areas that recorded annual increases in their serious delinquency rates. Metros with the largest increases were Panama City, Florida (0.4 percentage points) and Dubuque, Iowa (0.2 percentage points). The remaining 12 metro areas each logged an annual increase of 0.1 percentage point.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
